01 Aug New Mortgage Product & The Ultimate Low Risk Mortgage
As the market adjusts to mortgage rule changes, lender mortgage issuance requirements, provincial policy changes, and everyone’s favorite the “Trump Factor,” some lenders are upping their game and offering two products that are at both ends of the spectrum.
We now have access to two lenders, one offering interest-only mortgages with a fixed payment and fixed interest rates (interest only payments were only provided on floating lines of credit prior) and at the other end of the spectrum a lender offering very attractive full featured ten-year mortgages.
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 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 a 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. However, if you were making interest-only payments, the monthly cost would be around $1,321/month providing an extra $580 in monthly cash flow.
✓ 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 employment 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 neighborhood 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
The Ultimate Low-Risk Mortgage
Ten Years of Guaranteed Payments with a Prepayment Plan that leaves a minimal mortgage amount at the end of the term.
With the possibility of interests rates rising over the next few years for some this is very unsettling and having a stable payment with no surprises is comforting.
Currently, a few lenders are offering ten-year mortgage rates ranging from 3.94% to 4.09 %, if you are wondering a five-year mortgage for the last ten years has averaged about 4.25 %.
In addition to the stable payment, the lenders offer the ability to increase payments over the life of the mortgage which could leave a minimal balance in 10 years.
For example, if a borrower were to have a mortgage of $300,000 with bi-weekly accelerated payments of $784.16 and take advantage of slightly increasing payments by 5% each year the balance would then only be $43,700 in ten years !!
The Ultimate Low-Risk Mortgage definitely has some great secure benefits and peace of mind.
For more information about the Flex Mortgage or The Ultimate Low-Risk Mortgage please contact Michael Friedman at 604-657-1684.