How does remortgaging work to buy another property?
You have a property that you have a mortgage on, and that property has likely increased in value, meaning that you have some equity in that property.
This is great, except that as the value of your property increases, so too do the property taxes that you pay the government. So, as your property grows in value, and as your equity increases, it is actually costing you more money, in the form of higher property taxes. One way that you can look at offsetting these higher costs is by looking to re-mortgage and using that money towards another property.
Now, there is no rule or law that states that you can only use the money from re-mortgaging towards another property, I would like to make that crystal clear here before moving forward. There are many things that you can do with the money, you can use it to consolidate any higher interest debt that you may have, you can use the money towards buying a vehicle perhaps, a boat, a vacation, and yes, even towards buying another property.
Is it worth remortgage to buy another property
This is a great question. Before you even start the re-mortgaging process, you want to see if it is worthwhile for you. And the truth is, the answer to this questions is very subjective. It really does depend on what you want to do – what your outlook is. Walking through your goals and your plans with an experienced mortgage broker may help you get more clear on whether it is worth it, for you, to remortgage to buy another property.
Some of the aspects to consider are 1) what will it cost me to re-mortgage 2) will i have enough money to do what I want to do with it after I re-mortgage 3) are there any hidden costs that I need to be aware of (you don’t want to end up with a bunch of surprises).
Remember, that you will likely incur some legal fees and set up costs for a remortgage, and you will incur similar costs when you purchase your new property. If you are in BC, you will also need to account for the Property Transfer Tax.
All of these things need to be taken into account, and there is more also. Most of this can be covered and you can get to the bottom of these questions within about 15-20 minutes with a consultation with an experienced mortgage broker.