Your best-performing asset probably isn’t that star mutual fund in your portfolio. Most likely, it’s the roof over your head.

Residential real estate has been on a prolonged and spectacular rise in almost every part of the country. Odds are that – wherever you are in your mortgage – you’ve seen a great increase in your home equity.

Rising home values have made real estate a great investment for Canadians. So good, in fact, that a record number of average Canadian homeowners have a plan to multiply that advantage: by purchasing investment property.

In most cases, these people don’t have wads of cash on hand to plunk down for a second property. What they have is equity in their principal residence. That translates to assets that they can leverage to maximize their real estate investment potential.

Leveraging is a powerful financial strategy. The idea is this: you can access funds for a downpayment on an investment property by tapping into the home equity that’s building in your principal residence. The investment property is managed to provide income to cover the mortgage payments and property expenses. Remember, too, that the interest on the mortgage is tax-deductible for an investment property: another important advantage in building your investment. Many investors keep the leverage strategy going: as one investment property begins to build equity in a rising real estate market, it can be leveraged to purchase another property.

There are many motivations for this kind of investing. In some cases, the investments provide some available income almost immediately. Others see the investment property as a kind of retirement plan: the rent will provide important income at a later date, or the property can be sold to provide a retirement nest egg without the burden of landlord responsibilities.

In university towns, you will often find investment properties that have been purchased by parents. At a time of rising housing costs for students, this has become a sensible strategy: the child has accommodation during their school years, and takes on the responsibility of landlord to other students who rent the extra space to cover the ontairo mortgage.

Investors who are skilled at home improvement will sometimes leverage their equity to purchase an investment property, improve it, and then sell for a profit – progressively building their net worth by capitalizing on both their skills and rising home values.

But the most common reason for purchasing an investment property is simply to capitalize on the wealth-building power of residential real estate. Rising home values continue to give you a steady increase in net worth – whether or not you are pocketing profitable rents. You’ll only want to ensure that the property will cash-flow to cover the mortgage and maintenance costs.

Independent mortgage brokers now have access to a range of mortgage options for investment properties, and can help you assess your situation. One of the most innovative lenders, GMAC, has a mortgage called iinvest, which makes it easier than ever for average Canadian homeowners to purchase investment properties. In most cases, you should anticipate tapping into your home equity for a 25% downpayment on an investment property. (GMAC’s iInvest actually offers approvals up to 85% on mortgages up to $500,000 or $700,000).

How much of your home equity can you access? Let’s say you have $80,000 remaining on your mortgage and your home is valued at $280,000. If a bank will loan 90% of the value, then you have access to $252,000. You still need the $80,000 for your existing mortgage, but that leaves you with a potential $172,000 in available funds. You will, of course, want to make only a minimum downpayment, as it makes good tax sense to hold your larger mortgage on your investment property.

Many wealthy Canadians have achieved their financial success by leveraging small assets to create progressively larger ones. It’s a great way to fatten an investment portfolio, build net worth, or save for an earlier retirement. Best of all, it’s a strategy that’s within the grasp of most Canadian homeowners.

 



 

Finally the Holiday Rentals section is live on the Spanish Hot Properties site and can be navigated from the left hand side navigation system.  The Holiday Rentals system works in a very similar way to Spanish Hot Properties property for sale and new developments section on the top bar of the site. Where you go into an area and navigate to a city or move up one level to a region like Andalucía.

 

Spanish Hot Properties as a company will be listing their own Holiday rentals but most importantly this section of the site will be open to other agents and private owners alike at a one off €50.000 Euros a year for a one off properties and for agents as many properties as they like for around €30,00 per month. Spanish Hot Properties have priced it so cheaply that not one agent cannot afford to put there properties on their site. Also with other syndication deals with other sites agents and property owners are going to reach an incredibly large audience.  Nick Stuart said  “This is a departure for our company as for all intents and purposes we are going to become a Holiday Rentals portal which is total different to the way we work when we sell property where every agent that is part of our network throughout Spain has been personally checked out by myself and Spanish Hot Properties.  However for €30.00 Euros a month it is not possible to carry such checks out so in reality we will be just like any other Portal and the onus will be on the renter to make their own checks on the Agent whereas when you buy property from Spanish Hot Properties anywhere in Spain you know you can do so safely and securely with absolutely no risk.”

 

Spanish Hot Properties are currently building the agents section and billing section of the site and will be able to take agents properties on the June 1, however they are in a position to take individual properties direct from owners straight away.

 

Anyone wishing to find more about Holiday Rentals in Spain from Spanish Hot Properties should either call us or email Spanish Hot Properties.

 



 

 

 

So what does one do to ensure that they have a good chance of gaining a mortgage in this poor financial environment? Well the first thing to do is to get a copy of your credit report to check the condition of your credit. That means getting a credit report online for as little as 5 pounds and going through the history to confirm you have not faired poorly on your credit.

If you see a poor total on your score, you will be told the reason and the company who has written your credit down. You can contact the credit scorer to describe to them that the bad score was a one off and whether the credit history can be adjusted. If the reason for the negative credit count is petty then you should be able to get your credit history cleaned.

Once you have resolved your credit history, ask a good mortgage broker to appraise and pick the best mortgage product for you. Mortgage brokers can have an experienced insight into the market so they are well worth using.

Once you have got a well qualified mortgage deal go through the application method and if all is well you should pass the application as long as you match the banks lending requirements. A real cleaning of your credit history and ultimately a successful application will save you chasing for an adverse credit mortgage that can cost too much.

It is a good idea to employ a good mortgage broker who has access to a substantial amount of lenders who are at present lending. Access to a considerable number of lenders suggests that you get a an enhanced selection for the many assortment of loans that you can pick. It can mean that you end up obtaining a mortgage rate that you may not have found on the high street.

A reputed mortgage broker does not have to be dear either. Many mortgage broker price a fee for the privilege of getting you a mortgage and this fee can range from anything above 300 pounds to 1000 pounds. A good way to get a good mortgage broker is to talk to family and people you know and ask them to recommend a good mortgage broker that they may have used. There is a good chance that a person who you know will have had a new mortgage or re-mortgaged their house recently and you can get their recommendation.

Once you have located a mortgage broker and applied for your mortgage, make sure that you have all the pertinent paperwork to hand to make sure that the mortgage application is processed promptly. These include documents like bank statements, your private Id including your passport and evidence of address as well as any wage slips. Hand these over to your broker and you are prepared to get on the accepted path to securing a good mortgage to make your home acquisition proper.