Pre-Qualified, Pre-Approved Mortages Ottawa, Ontario

High returns in rental properties.

According to economists, the Canadian economy is set to continue experiencing a modest growth in 2015. Further predictions were made on the year, citing it as a sellers’ market year. With all these positive predictions and speculations, the desire for and trend of rental property owning all over Canada has grown.

Taking Ottawa as a case study, the commercial property market performance has been projected to experience steady high gains. This can be in some way attributed to the strong public sector presence that gives investors in the housing market a justification for investment. A further fueling factor is the demand that has continued with time to surpass the supply of properties for rent. The high demand has ensured that property values will hold. With the high demand and less supply, naturally rents will continue going up, bringing in more returns for investors. Such scenarios have gained the attention of many Canadians and with the ease of access to low cost debt and equity capital, many have taken steps to own a rental home.

Other factors that can’t be overlooked include the GDP forecasted growth. A growth in GDP, directly translates to firm retail consumption and a steady job growth trend. The ultimate result of this is the growth and prospering of the retail sector giving a positive plus boost to rental housing owners.

Factoring in all the above points, we get to see that the rental property markets are giving owners and investors solid returns. Meanwhile, property for rent owners will continue cashing in huge as all the fueling factors for their high returns are here with us to stay.





Ottawa Mortgage Refinance Your Property

Why You Should Refinance Your Mortgage

In hard economic times, you may be looking for ways to cut costs, but saving money is not the only reason why you should refinance your mortgage. You can use cash freed up to build a retirement account, do a remodeling project or send your child to college. You can take advantage of built up equity to buy a boat or car, or to take that vacation you have been wishing for.

One of the reasons for a refinance is to gain a sizable amount of cash from the equity that has been built up over the months or years. The cash that is available can be used for any number of large projects or purchases. For example, you may want to send a child to college or renovate the home itself to make it more functional or attractive. You may want to purchase a vehicle or a boat. In effect, you are giving yourself a loan.

If you are trying to cut monthly costs related to housing, refinancing the principal amount is a good way to do so. There are two ways in which the monthly payment can be reduced. A refinance can spread the remaining principal balance over a longer period. If you are able to negotiate a significantly lower interest rate, the monthly payments will also be reduced. You could keep the payoff amount the same as the existing loan and pay less every month.

Locking in a lower interest rate is an advantage in itself. Interest rates may be significantly lower than when the original loan was acquired. You might be able to get a better rate because of an improved credit history. The switch from a variable rate to a fixed rate may be a wise financial move for you. Stability in the payment amount will benefit in budgeting and planning.

Consolidating high interest rate loans into a lower rate home equity loan is an excellent reason for a refinance choice. Credit card interest rates tend to be much higher than mortgage interest rates. By rolling these high rate loans into a home loan, you could save thousands in interest payments over the loan period.

The reasons why you should refinance your mortgage are varied. The main feature may be that you have access to lump sum amounts or to more working capital each month. When you are proactive in managing your finances, you are able to enjoy the possessions that you have readily.

At Capital Mortgages in Ottawa we strive to be your personal mortgage broker for life.

Questions to ask before buying a rental property

Owning a rental property can be a profitable investment — but it’s not for everyone. Here are some questions to ask yourself before you take the plunge.

If you’re thinking of purchasing an investment property to rent out to tenants, you will need to do some serious research. There’s much more to being a landlord than putting up an ad on Craigslist — it’s like taking on a second job. You will need to factor in realistic financial projections, and carefully weigh the pros and cons of your decision.

Here are a few things to consider before purchasing a rental property.

1. Do you have enough saved for the down payment?
Under Canada’s new mortgage rules, you must come up with a down payment of at least 20 per cent for a small rental property holding from one to four units. This rule does not apply to borrowers whose principal residence also includes rental units.

2. How much income will the property generate?

You will need to do some research into the neighbourhood. What does rent typically cost, and what is the vacancy rate in that area? Don’t assume that you will always have a tenant — according to the Canada Mortgage and Housing Corporation (CMHC), the average vacancy rate in Canada’s 35 major centres is 2.5 per cent. To be safe, assume a four or five per cent vacancy rate into your financial projections, and don’t forget to calculate potential costs, such as repairs and maintenance.

3. Can you be a successful landlord?

Being a landlord is a second job. It’s not just about finding a tenant and letting the money come in every month. Not only do you have to be available to field emergency calls and keep up with maintenance such as routine fixes, yard work and even shovelling snow, but if you rent to the wrong tenant, you might have even bigger problems to deal with, such as non-payment of rent. Hiring a property manager can help, but that will greatly reduce your monthly profit from the property — and you never want to be in a negative cash-flow situation.

4. How will deductions affect your profits?

By deducting certain expenses from your income, you can reduce the taxes that you owe. Applicable expenses include mortgage interest, property tax, insurance, property management, maintenance and utility bills. You can also deduct any losses from your rental property. If your expenses exceed your rental income, you can subtract your losses from any other source of income you have coming in.

Purchasing a rental property can be a great way to diversify your investment portfolio, but it is a big commitment. Being a landlord is time-consuming, and not for people who are interested in an easy, passive income stream.

Want to learn more? Check out the Canada Revenue Agency’s Rental Income Guide, where you can get more information on deductible expenses, and most other issues regarding rental property.