interest rates

[Annabanana]

Hi again!

I had such a great response last time I thought I would poll again! We have found a property, and now are slightly confused about which direction to go with our mortgage. We are using our LOC for a 20% down payment.

What is everyones opinion in the area of mortgage rates, we have several options.

1.) 3.3 variable for 5 years - suggested by one broker, due to the fact that this is our first income property, if we decide it isn't for us.

2.) 2.99 fixed 4 year. This was offered by our current bank

3.) 3.99 fixed 10 year.

4.) some type of cash back mortgage.



The property we are purchasing is a duplex with current tenants that cover all bills, plus some. We think that maybe one day, we would like to purchase another home, but since we are so inexperienced, we need some time to see if we actually like being landlords. The full mortgage would be 150000.00. I am concerned about interest rates rising, and I am not that much into gambling. Thank-you so much in advance.

 

[Thomas Beyer]

Take the 4 or 5 year mortgage at 3%, assuming you wish to hold this long. 10 years is too long.

 

[Tibo]

I would go with your option 2. It give you piece of mind due to low intreats rate and locked in. The first year I started I learnt that I underestimated the repairs and maintenance and to give myself an exit strategy. 5% R/M was not enough. It depends on the building. And exit strategy of having a Property Manager take care of the place just in case I hurt myself. I P/M my own on the first properties I build to learn how to do it. I like it but if I hurt myself I can call a local Priofesional property manager. I still own the asset it still cashflows and there is no variables beside tenants/repairs and maintenance.