A readvanceable mortgage combines a traditional mortgage with a home equity line of credit in one product. Once the mortgage balance reaches 65% of the property value, every dollar of principal you pay down automatically increases your HELOC limit by the same amount, letting you access capital without a new application or qualification.
Some lenders register a collateral charge or lien that is much larger than the actual loan amount, sometimes over 100% of the property value. You should ensure the lender registers only for the exact loan amount you are receiving, because a larger registration reduces your net worth on paper and can interfere with future financing.
The Mortgage Plus Improvements product lets you roll renovation costs into your first mortgage at competitive prime rates instead of using high-interest private money or your own cash. The lender advances funds in stages as work is completed and inspected, and unlike traditional construction loans, the lender does not hold back money for construction liens.
A Flip or BRRR mortgage is a short-term, open loan based on the After-Repair Value that allows you to purchase undervalued properties with as little as $10,000 down and renovate them quickly. It is designed for experienced investors who can manage renovations efficiently, because interest rates are significantly higher than conventional mortgages and sitting on the loan for too long will erode profits.
Hidden costs include keeping units below market rent for up to ten years, making energy efficiency and accessibility upgrades, and paying an insurance premium that gets added to the loan amount. Because of these expenses, the regular CMHC program may sometimes be more beneficial than MLI Select, so you must weigh the costs against the benefits of 95% LTV and a 50-year amortization.
