Real Estate

Financial situation for investment property in a year or so....

  • Last Updated:
  • Aug 22nd, 2021 12:12 am
[OP]
Deal Addict
Jan 7, 2014
2626 posts
515 upvotes
Manitoba

Financial situation for investment property in a year or so....

Bought a house and took a mortgage for 25 years. paid 20% down.
Now I need to buy an equipment for 25000 dollars. I have the money but vendor is offering 60 months zero interest loan so I am thinking whether to pay this 25K now or take the loan.
This needs to tie to my wish to buy an investment property in next one year.I will again go 20% down on that as well and have that money already( even if I buy the 25000 equipment right now without loan).
I do not want this 5 years loan of 25000 count against me when I take the second investment mortgage next year.
What should I do if my priority is hassle free second mortgage at best rates. Buy the equipment for 25000 now or take the interest free loan and save that money to add to down payment for second property.
My job situation is decent but I am a contractor not a permanent employee if that matters.....
5 replies
Newbie
Jun 28, 2012
71 posts
52 upvotes
Ontario
Impossible to say without running all the numbers to see how much of an impact that $25K loan would have on your debt servicing ratios, when trying to apply for another mortgage for the investment property (while also including the mortgage/taxes on your current home). Many different parts to it.
Sr. Member
Feb 23, 2005
954 posts
72 upvotes
Asker123 wrote: Bought a house and took a mortgage for 25 years. paid 20% down.
Now I need to buy an equipment for 25000 dollars. I have the money but vendor is offering 60 months zero interest loan so I am thinking whether to pay this 25K now or take the loan.
This needs to tie to my wish to buy an investment property in next one year.I will again go 20% down on that as well and have that money already( even if I buy the 25000 equipment right now without loan).
I do not want this 5 years loan of 25000 count against me when I take the second investment mortgage next year.
What should I do if my priority is hassle free second mortgage at best rates. Buy the equipment for 25000 now or take the interest free loan and save that money to add to down payment for second property.
My job situation is decent but I am a contractor not a permanent employee if that matters.....
You can always take the loan now, and when it's time to buy the investment property, have the mortgage agent/broker run the numbers and see how this loan affects you. If this loan is stopping you from getting the second mortgage at good rates, you can then choose to pay off the loan.
[OP]
Deal Addict
Jan 7, 2014
2626 posts
515 upvotes
Manitoba
^ This sound good. I think equipment seller should not have any issue me pre paying a zero interest loan. Its the interest earning loans that the institutes usually charge penalty if you prepay.
Sr. Member
Jul 14, 2019
808 posts
725 upvotes
Ottawa
Asker123 wrote: ^ This sound good. I think equipment seller should not have any issue me pre paying a zero interest loan. Its the interest earning loans that the institutes usually charge penalty if you prepay.
What is your advice for someone who has not invested in RRSP/TFSA and wanting to buy their first home?

I'm currently on a contract job role in IT and me and my spouse saving for at least make the downpayment amount(~65K) for a new house. What are the prospects of getting mortgage and be in good standing to get one?

Just asking for your opinion if you don't mind.
[OP]
Deal Addict
Jan 7, 2014
2626 posts
515 upvotes
Manitoba
Darshan7 wrote: What is your advice for someone who has not invested in RRSP/TFSA and wanting to buy their first home?

I'm currently on a contract job role in IT and me and my spouse saving for at least make the downpayment amount(~65K) for a new house. What are the prospects of getting mortgage and be in good standing to get one?

Just asking for your opinion if you don't mind.
Hey this is off topic but I guess youasked me as you noticed that I am a Contractor.
Well bank did not discriminate me based upon the fact that I am contractor and not a permanent employee. I mean I am an employee of my incorporation tion. I provided them my companies account statements as well as well as my personal statements.
As for Rrsp and tfsa, if you haven't invested in those , you should think about it. RRSp is tax deferral and can save you tax right now but you will pay tax at retirement when you withdraw but likely your income then will be less so liw taxes.
if you want to take loan from rrsp as first timehomebuyer, you can each take 35000 which you need to pay a bit each year or add to your income.
money needs to be there for 3 months before you can withdraw. if you plan to buy soon, no point putting in rrsp now but if you plan to buy lets say next year, you can put it in rrsp then withdraw. everything depends upon how much tax benefit the rrsp will give you. it depends upon you salary bracket.
Again, I am not aware of your finances so can only tell generically. but good luck saving for downpayment and keep discussing your situation with your trusted mortgage specialist ( try the same bank that your business account is with) or mortgage broker and take preaprroval.
hope it helps

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