Off-market and Wholesale Investment Real Estate Property Blog
- Smart Money Podcast
- October 1, 2021
Financing Your Off-Market and Wholesale Real Estate Investment Properties
Once you've found a property that you like you will need to get financing for the property either through a mortgage with a bank or private lender. In this article we'll cover the differences between the two and provide useful links to help you find the right lending source for your property.
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What is a Mortgage?
A mortgage is a loan secured by a house typically from a bank although secondary mortgages and the like exists which are typically given by a private lender which simply means a person or business other than a financially accredited institution, such as a bank. Typically in Canada when working with a bank you can expect to get a mortgage that will be about four to five times your aggregate income so whether you're applying alone or as a couple the sum of the two of you. you can apply for different lengths of time on the mortgage although typically most people will go for a 25 or 30 year term. When working with a private lender the requirements vary by the lender, but in generally are less stringent as the private lenders take on more risk in exchange for a higher interest rate. This type of lending makes the most sense for investment properties you want to pull money out of relatively quickly or use as a cashflow generating resource.
Things to Consider with Mortgages
One thing to consider is whether to get a fixed image or and or variable the difference between the two is that a fixed mortgage has the same price set out for all five years and has a very large prepayments or breaking penalty typically called IRR differential. and open or variable mortgage means that you will pay the market rate market rate with your discount and in fluctuate open as the bank Canada that's the rate and the banks respond to that. then I bought a variable mortgage and it has a very low prepayment penalty typically three months of interest. A mortgage payment is split into two parts the interest payment and the principle payments you can think of the principle payment as the amount that you put in as equity into the house and the interest payment as the amount of money you're paying the bank back for the loan that they gave you to buy the house.
How Much Does a Mortgage Cost?
Take a look below and see some of the different options available to you!
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