Mortgage rules affect investor strategies: online poll
By
Vernon Clement Jones
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11/12/2011 3:00:00 PM
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The government’s new mortgage rules have, indeed, affected the acquisition strategy of many real estate investors — right along with their home-buying counterparts — suggests an online poll conducted by CMP’s sister publication, Canadian Real Estate Wealth.
While 40.3 per cent of respondents said those new rules – limiting how much you can borrow against the equity in a property and the amortization on the mortgage itself – have had no effect on this year's buying habits, the majority said “yes.”
Just over 37 per cent said the federal government’s move to decrease the maximum loan to value on a refinance to 85 per cent, among other changes, “significantly affected” their acquisition strategy. A smaller number described those consequences as “slight.”
While the decision to withdraw CMHC backing for HELOCs and shorten the life of an insured mortgage to 30 years had some impact, expert investors have suggested the change around refis is most to blame for cramping their ability to tap into current holdings in order to add to them. The poll did not, in fact, ask that question.
Still, many are finding new ways to come up with the cash to further invest in Canada’s property markets, which have seen positive price growth despite the slowing economy and increasing uncertainty.
Private-lending funds are only one of those new avenues, says one investor and mortgage broker.
“Many real estate investors are unaware that (individuals) can use RRSPs or any other registered funds in debt-related vehicles, such as mortgages,” said Marcel Greaux, an active real estate and mortgage investor, but also a mortgage agent specializing in private money placement using cash, RRSPs and TFSAs etc.
“For the real estate investor looking to use private money, there is more than enough money available to do deals with a little creativity.”