What would make more sense?
I have a rental with $340K mortgage 1.64% fixed 25yr amortization. If I need to take out about $100K to invest for a ~10% yield, I have 2 options and wondering which one would make more sense...
1. Cash out re-finance at ~1.70% variable with fixed monthly payment 30yr amortization
2. 2nd position heloc at prime + 1.5%
With the first option, my monthly mortgage payment will go up about $175 per month. Since it will be fixed monthly payment, I will not have to 'worry' about my payment increasing as they will simply allocate more towards interest payment which I'm ok with as monthly cash flow is important. Hoping BOC won't go crazy with rate hikes.
With the 2nd option, my interest only payments will be $350 per month to begin with, and will increase with the rate hikes.
My gut feeling tells me that the first option might be better, but at the same time breaking the 1.64% fixed rate (still 4 years left) seems wrong. Help me out guys
1. Cash out re-finance at ~1.70% variable with fixed monthly payment 30yr amortization
2. 2nd position heloc at prime + 1.5%
With the first option, my monthly mortgage payment will go up about $175 per month. Since it will be fixed monthly payment, I will not have to 'worry' about my payment increasing as they will simply allocate more towards interest payment which I'm ok with as monthly cash flow is important. Hoping BOC won't go crazy with rate hikes.
With the 2nd option, my interest only payments will be $350 per month to begin with, and will increase with the rate hikes.
My gut feeling tells me that the first option might be better, but at the same time breaking the 1.64% fixed rate (still 4 years left) seems wrong. Help me out guys
