With so much negativity in the Canadian mortgage market these days we are excited to see the launch of innovative mortgage products to assist the Canadian home buyer. Whether it be the tightening of mortgage rules, higher interest rates or simply the negative buzz around the Canadian Housing market over the last 18-24 months we have seen new mortgage products in the Canadian Mortgage landscape. Specifically the Interest Only Flex Mortgage.
WHAT IS IT?
The Interest-Only Flex Mortgage is suitable for homeowners and investors looking to purchase or refinance up to 80% of the value of the home and take advantage of lower monthly payments during the term.
THE BENEFITS
The Interest-Only Flex Mortgage offers clients an interest-only payment or a combination of an interest-only payment and an amortizing (principal and interest) payment with both Fixed and ARM rates available. An interest-only payment is where you only make payments of the interest during the term; you don’t have to repay the principal on the mortgage like on a traditional amortizing mortgage. Since you are only making a payment of the interest, your monthly mortgage payment will be comparatively lower, giving clients choice and flexibility with their finances. For example, on a $400,000 mortgage over 25 years at a 4% interest rate, the usual monthly repayment would be approximately $1,902/month. But if you were making interest-only payments, the monthly cost would be approximately $1,321/month providing an extra $580 in monthly cash flow. *this example is for demonstration purposes only.
APPLICATIONS
Property investors that own multiple rentals and want to keep mortgage expenses low Clients that are carrying other high-interest debts (i.e. student loans and credit cards) and will use the extra cash to pay these down Clients with cyclical or seasonal work who would like to pay down their mortgage using their 20% repayment feature on a schedule that fits their irregular cash flow Clients living in markets with high real estate prices can purchase a home in their desired neighbourhood with manageable monthly payments Clients that have goals to improve wealth over the long-term and can put that extra cash to better use through investing opportunities, rather than using it to repay principal on a mortgage
Clients that seek greater control of their cash flow and aim for optimal management of their liquidity Clients looking for lower monthly payments to save for home renovations and improve property value.
Contact me today to learn more about whether an Interest Only Flex Mortgage is the right choice for you!
Thanks for reading,
– Meghan
