Saturday, October 7, 2017

Refinancing Transaction

On Friday, we closed a refinancing transaction.

The purpose of this transaction was to move from high interest-only mortgage payments to lower interest rate fully-amortized mortgage payments. The new monthly Principal + Interest payment is about $300 lower than the previous interest-only amount.

This means that I now get an extra $300 bucks in my pocket every month and on top of it, tenant is paying off the principal bit by bit.

Couple of lessons learned:

  • I should have started working with the new lender a lot earlier. CIBC let me know that for my portfolio of 6 properties, they require at least 45 days to do the underwriting. 
  • I have to learn how to simplify the structure of future deals. Each of the shareholders had to provide personal guarantee on the mortgage and obtain Individual Legal Advice (ILA) from an independent lawyer. In our case, this entailed a quadruple lawyer cost plus a ton of paperwork had to be sent to the bank. 
All in all, this refinancing transaction is an achievement. So I had a Martini to celebrate :)