Author Topic: Mortgage renewal coming up on primary residence - what are my options?  (Read 584 times)

Silkspin

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We have a primary residence and a rental. The primary is up for renewal in the Fall. Neither of us are too knowledgeable of the real estate game. In fact we're accidental landlords. We originally wanted to sell, but with nutty Quebec politics causing a market stagnation just as we bought/sold, we ended up renting our former home.

Question - is it ever good to pull equity from your primary home and use that money to invest somewhere? We are planning to stay in the primary long term. What about using that money to reduce mortgage on rental and yielding more from rent, and lowering mortgage payments in case we lose renters and end up having to pay both mortgages? Or leave the primary and when the rental comes up for renewal, pulling equity from there for investing?

We'd like to reno our old/decrepit kitchen/bath, but since we are planning to stay long-term, I'm not sure this will give us any value beyond more comfort and convenience in daily living. So I think I have to can that idea and save instead and do it bit by bit.

Or do nothing and just a refi at good terms? Just not sure if I'm missing some opportunity here. Thanks for your help.


Goldielocks

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Yes, it is often a good idea to invest right now, using money from your primary home, when interest rates are lower than market returns (if the risk of market returns is acceptable to you).  Keep 20% equity, though.

If you get a Home line of credit, in addition to a mortgage -- you can use that to borrow to invest outside of an RRSP/ TFSA and deduct the loan interest.   If you are going to use your home equity after you refinance to invest in the tax sheltered funds, then just getting a larger mortgage works better as mortgage rates are a bit lower.

You want to keep as high a mortgage on the rental as possible, because that loan is tax deductible, and deploy the money elsewhere.

Silkspin

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Ok yes, you're right on the rental.

Thanks for your insights.