Since mortgage regulations in Canada are based on expense to income ratios, it is often necessary to extend the amortization of existing mortgages, to lower the existing payments on existing mortgages. This allows real estate investors to qualify for larger mortgages, improve cash flow on rental purchases, create an audit trail for tax-deductible interest, and access additional capital.
If you are retaining your residence as an investment property (rental) and moving on to your next home, it is important to evaluate your current financing and look for opportunities to achieve the maximum leverage (i.e., 80% of the value). If you (re)structure your current residential financing to maximize the leverage from the property before it becomes an investment property, the mortgage interest becomes tax-deductible as soon as the property is occupied by tenants.
It is far better, far smoother, and likely less expensive to address the restructuring of the current residence financing well in advance of writing any offer to purchase to maximize tax deductibility of interest and to know exactly what can get approved.
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