Designing a Mortgage That's Right For You!
As real estate costs in Victoria, BC conintue to rise many would-be buyers are considering co-ownership as a way to make home ownership more affordable. When purchasing a property with friends or relatives you may want different mortgage terms, a mixer mortgage may be the way to go. Mixer mortgages allow each party to opt for a fixed or variable mortgage and pay the mortgage out of separate accounts. Read up on the steps co-owners should take, including determining the size of each owner’s share, agreeing on who will pay for property repairs and improvement expenses, and deciding on a process for dispute resolution if disagreements arise.
Co-owners should keep in mind that mixer mortgages are registered as collateral charges. Collateral mortgages cannot be moved or transferred at maturity, which means the only way out is through a refinance and the homeowners will have to pay for legal and appraisal costs when they want to move. This closes some doors for an easy transfer but does work for certain situations.
For example, some buyers have arranged a mortgage that has a portion as fixed and a portion as variable. For others, it might make sense to have a home equity line of credit as a portion of the total mortgage. For a high-ratio mortgage (meaning you’re borrowing more than 80% of the property’s value), mixer mortgages may become more complicated because of lender requirements.
Mixer mortgages make it possible for some buyers to afford home ownership but they do come with certain financial risks for everyone involved. Consider what would happen if one owner lost her job and wasn’t able to pay her share of the mortgage (lenders can’t foreclose on part of the property, so one person not paying could threaten the other owners’ shares). Another scenario might involve one owner who wants to move. The other owners would then have to decide if they want to buy out the available portion. If one owner dies, the surviving owners would have to cover a larger share of the mortgage.
For some, these risks are worth the prize of home ownership. Whether you are seeking a mixer-mortgage in Victoria, or just need a reliable mortgage broker Victoria, we can help find the mortgage that’s right for you. Contact us today with your questions.