If you’ve been thinking about investing in real estate, there are some important things to keep in mind when it comes to where you decide to invest, how best to position your mortgage and why it’s important not simply to seek the lowest available rate.

 As always, location is a key component to any real estate purchase. You want to see the official community plan, current re-zonings, and investment from developers and the city. These details will help you understand how many more buildings are being erected in the area, as this could affect the view or quality of living for a tenant.

Other considerations include what improvements are being made to the area (roads, bridges, entertainment facilities, etc), proximity to transit, malls, hospitals, schools and major roads, as well as strata bylaws (for rental restrictions).

Why the lowest rate may not always be the best

When it comes to mortgage rates, cheaper may not always be better – for both investment and personal residential purposes.

When it comes to the type of mortgage you select – fixed or variable – some lenders do offer the ability to have your broker assist you with lock-in to ensure the best rate. For rental properties, however, some lenders restrict the products they allow.

Longer amortization is better when building a real estate portfolio for future qualifying purposes, so you don’t have to redo your other mortgages at a later date for an added expense. If paying your mortgage(s) off faster is important to you, ensure you use prepayment privileges. Also remember that the interest you pay on rental properties is 100% tax deductable.

Various mortgage terms, such as a lower down payment, larger rental offset ability, mortgage structure (saver mortgage where your principal portion is re-advanceable to assist you with down payments for future purchases) are also important considerations.

For rental offsets, keep in mind that different lenders allow different offsets, which will affect you when you’re looking to add to your portfolio.

Accredited Mortgage Professional (AMPs) look for the overall best long-term mortgage solution for each client. In today’s market, the lowest rate is not the best option for many borrowers and often costs them more in the long run. Having a proactive AMP is the solution to a borrower saving the most amount of money on their mortgages, as lenders are often not focused on proactive solutions because these options aren’t as profitable for the banks’ shareholders.

Tune into The Mortgage Show Saturdays at 7pm on CKNW with Angela Calla to learn more important tips on your mortgage.