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Maximizing Your Investment: The Benefits of Refinancing for Canadian Real Estate Investing

January 30, 2023 | Posted by: Matt Broom-Hall

Maximizing Your Investment: The Benefits of Refinancing for Canadian Real Estate Investors

Refinancing to Buy an Investment Property in Canada

If you are looking to invest in real estate in Canada, refinancing your existing mortgage can be a smart financial move. Refinancing allows you to take advantage of lower interest rates, or to access equity in your home, to help finance the purchase of an investment property. In this post, we will explore the basics of refinancing and how it can be used to buy an investment property in Canada.

What is Refinancing?

Refinancing is the process of obtaining a new mortgage to replace an existing one. The main reason for refinancing is to take advantage of lower interest rates, which can result in lower monthly mortgage payments and substantial long-term savings. Refinancing can also be used to access equity in your home, which can then be used as a down payment for an investment property.

Benefits of Refinancing to Buy an Investment Property

  1. Access to Equity: Refinancing your existing mortgage can provide you with access to the equity in your home. This equity can then be used as a down payment for an investment property, allowing you to purchase a property without having to come up with a large sum of cash upfront.
  2. Lower Interest Rates: Refinancing can also allow you to take advantage of lower interest rates. This can result in lower monthly mortgage payments, which can free up cash flow to be used towards other investments.
  3. Tax Benefits: Investing in real estate can also provide you with tax benefits. The interest on your mortgage is tax-deductible, which can reduce your overall tax bill.
  4. Potential for Rental Income: An investment property can provide you with a steady stream of rental income, which can help offset your mortgage payments. Additionally, the appreciation of the property over time can result in significant capital gains when you decide to sell.

How to Refinance to Buy an Investment Property in Canada

  1. Determine Your Eligibility: To be eligible for refinancing, you must have a good credit score, stable income, and a good debt-to-income ratio. You will also need to have a good amount of equity in your home.
  2. Shop Around for the Best Rate: Once you have determined your eligibility, it is important to shop around for the best refinancing rate. As licensed mortgage brokers in Alberta (with the opportunity to fund deals coast to coast), we can compare rates and terms from multiple lenders - including the big banks.  At no cost to you!
  3. Obtain a Home Appraisal: To determine the value of your home, you will need to obtain a home appraisal. This can be done by hiring a professional appraiser or by contacting your bank or mortgage broker.
  4. Close the Refinancing Deal: Once you have found the best refinancing option for your needs, it is time to close the deal. This involves signing the necessary documents, paying any fees, and receiving your new mortgage.

In conclusion, refinancing can be a smart financial move for those looking to invest in real estate in Canada. By accessing equity in your home, taking advantage of lower interest rates, and benefiting from tax benefits and rental income, refinancing can help make your real estate investment dreams a reality.

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