Did you know that:

Investing in an income property is a great start to build a portfolio of investments. Real estate has always been expanding, if your building is well maintained, you should make long term benefits;

Income of lessees’ annual fees will help to pay your mortgage and several maintenance costs. Did you know that the majority of the expenses can be deducted from the income tax return, which makes investments more valuable;

If you are young or self-employed, buying an income property could help making it more affordable, because the income earned by rental is generously added in your financial picture;

Income property can help building up pension funds, because when the mortgage will be fully paid, your building will be an interesting asset that will continue generating revenue and will have acquired a resale value.

What you need to know:

• You must be ready for emergencies that can occur at all times;
• You have to be quite handy to make repairs and maintenance in order to save money;
• You have to like management and have a good interpersonal quality;
• You must have contingency funds for unexpected expenses and emergencies.

Having some trouble saving for a down payment? Here are some helpful tips.

Set a long-term objective

Set an attainable and realistic goal, such as: before I’m 25 years old.

Be realistic

Be realistic depending on what you can afford, think about what type of house you like and where you’d like to live. A bit of advice, meet a financial advisor who can give you a good idea of what you’re entitled to and how you’d be able to achieve your objectives.

Budget

Paypecial attention to every payment that goes in your account versus what you earn. With this method, you’ll be able to evaluate you habits that need to be changed in order to save money.

Separate account

Open a second account in which you can deposit every month a certain amount of money that will allow you to achieve your goal.  This can be done at the same time of your pay cheque.

Cash

With every pay cheque, withdraw an amount of money that you will use until your next pay cheque. That way, you will hesitate to buy something unimportant.

Excess of money

If you do some overtime at work or you have an excess of money that you don’t have usually, place it in your savings account.  In any event, you are used to your standard budget!

Enjoy your home  

We know that going out in restaurants or in bars with friends can be pleasant, but it is often too expensive. Invite your friends for an evening at home and after a while, compare your budget you will be surprised!

Open a RRSP account

The federal government’s homebuyers’ plan allows you to withdraw up to $20,000 from a Registered Retirement Savings Plan (RRSP) to serve as a down payment for a first home. Consult a financial advisor or a mortgage professional for more information.

When it comes time to choose a mortgage, the most important part is obviously finding the right mortgage solution. There are many types of mortgages; the short-term and the long-term of course, but also the very long-term. Each one of those have their pros and cons, so it is better to choose the most appropriate for that moment in your life.

The importance of risk tolerance

There is a simple rule about mortgage interest rates (with its exceptions, or course): the longer the mortgage term, the higher the rate. Based on this, you could logically understand that the short term has a much more interesting rate. Never forget, though, that as it is a capital market, you should base your decision on risk tolerance, as these rates fluctuate.

If you have a higher risk tolerance, these rate fluctuations don’t really matter, so a short-term mortgage would be adequate to get this mortgage done with faster. But say you have a low risk tolerance and you are planning on staying in that new property for over 10 years, a slightly higher rate on a long-term mortgage would be recommended, as you would be protected from a sudden rate hike.

Adapt your rate to your goals

For example, you want to buy a second house you wish to renovate and resell in about a year. One would guess you want to make a nice profit out of this, so the short-term mortgage would be the better option in this case. You could take up a year-long term to not only have the best rates on the market, but also to avoid paying large penalties when you sell it.

On the other hand, if for some reason you can no longer afford to pay for your payments, you could consider switching to a very long-term (up to a few decades long). But never forget, even though each individual payment is much cheaper than before, that new house will also turn out to be way more expensive in the long run! This mortgage will also chain you to a financial institution for many years with practically no negotiating power.

So, you want to pay less interest?

The first thing that usually comes to mind is: The rate, the rate, and don’t forget the rate! And… it is actually one of the better ways to pay less interest. But THE best way to pay as little interest as possible when you take up a mortgage is to pay for it as fast as possible, by paying it on over 10 years, instead of 25, for example.

There are various ways to help you quickly pay it without hurting your budget too much. The accelerated weekly payment is a good example, but you can use a mortgage payment calculator to help you decide, based on your chosen term and amortization.

Remember

• The mortgage term has a very big influence on the rate. Typically, the longer the term, the higher the interest rate.
• Your mortgage term is usually based on your risk tolerance and your own personal goals.