Ana Maria Lacoste
Mortgage Alliance
E-mail: amlacoste@mortgagealliance.com
Ana Maria Lacoste
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Mortgage Agents Servicing: Ajax, Ancaster, Beeton, Bradford, Brampton, Burlington, Caledon, Castleton, Cobourg, Cooksville, Dundas, Freelton, Ft. Erie, Georgetown, Hamilton, Keswick, Malton, Milton, Mississauga, Newmarket, Niagara Falls, Oakville, Oshawa, Port Credit, Port Perry, Richmond Hill, Selkirk, St. Catharines, Streetsville, Thornhill, Toronto, Unionville, Welland
Like any bit of exotic fcinnniag, it makes sense only for the original people for whom it was designed. The problem is when it gets marketed to, and then bought by, people for whom it makes no sense.”Redraw facilities” (I don’t know what they’re called in the US) made a hell of a lot of sense for small business owners or consultants who had irregular, large payments rather than steady paychecks. Then they started making them available for everybody. If you had the nous to sit down with a pencil for five minutes you would have been able to see it didn’t make any sense. Sadly, people didn’t.I have an interest-only loan for investment purposes. It makes sense for me that instead of investing the $50k I had in cash, I paid it off my mortgage and borrowed the same amount to put into funds. The money is fungible, but for tax purposes, is treated differently (in Australia).Somebody who had an investment strategy for the five year period where the money not being paid off the principal (Difference between the PITI and I/O payment) of the house was invested and was producing a real return higher than the interest on the mortgage would be doing something sensible. The lump sum generated by the investment could then be dumped on the mortgage at the end of that five years to produce a faster overall reduction of principal than would otherwise have been possible.But these loans, like all exotic loans, are probably not being taken up only by borrowers for whom they were originally designed.