Loading page
Estimate the capital left in a Canadian property and the monthly cash flow after rehabilitation and a refinance.
Cash left in the deal
$30,000Purchase + rehabilitation − refinance loanEstimate: purchase plus rehabilitation, less the conventional refinance loan of after-repair value times LTV.
Monthly cash flow after refinance
-$83.66Rent − operating costs − refinance paymentRefinance loan: $320,000. Monthly payment: $2,083.66.
Example: illustrative 25-year amortization and $500 of monthly operating costs.
Rates as of
BRRRR describes buying, rehabilitating, renting, refinancing and repeating. For the refinance step, this calculator estimates how much of your purchase and rehabilitation money stays in the property and the monthly cash flow after the new loan payment.
The after-repair value is the appraised value you expect once the work is done. Refinance loan-to-value is the planned loan as a percentage of that value, up to 80% for a conventional refinance.
Cash flow also needs the mortgage rate, the amortization period and your monthly operating costs. The rate starts at the Bank of Canada's typical posted 5-year rate. The payment uses interest compounded half-yearly.
The example buys a property for $300,000 and spends $50,000 on rehabilitation, for $350,000 of entered costs. The assumed after-repair value is $400,000 and the conventional refinance LTV is 80%, so the refinance loan is $320,000 and $30,000 is left in the deal before excluded costs.
The loan uses the typical posted 5-year rate of 6.19%, an illustrative 25-year amortization, $2,500 of monthly rent and an illustrative $500 of monthly operating costs. Interest compounded half-yearly gives a monthly payment of $2,083.66, so the estimated cash flow after the refinance is -$83.66 a month before income tax.
Choosing the CMHC-insured option instead releases no equity: all $350,000 stays in the deal, and with no refinance loan the cash flow is rent less operating costs, $2,000 a month.
Acquisition costs, holding costs, refinance fees, taxes, selling costs and payments on any existing mortgage are not included, so real retained capital is usually higher. The result is not the cheque a lender issues at closing, which also depends on existing debt, discharge charges and fees.
Replace the typical posted rate with your own quote, as posted rates are often higher. Operating costs should cover property tax, insurance, maintenance, utilities you pay, management, condo fees and a vacancy allowance as one monthly figure. The payment is principal and interest only, and cash flow is before income tax.
A higher after-repair value or LTV lowers cash left but raises the payment, which can turn cash flow negative. A lender may still lend less, set other conditions or refuse.
The Financial Consumer Agency of Canada says you may usually borrow up to 80% of your home's value against its equity, which sets the conventional planning ceiling here. The Interest Act requires a blended-payment mortgage to state its rate calculated yearly or half-yearly, not in advance; the half-yearly method reproduces the agency's published example of $1,578 a month on $300,000 at 4% over 25 years.
Under the Eligible Mortgage Loan Regulations, an insured loan must be for a purchase or the discharge of an existing loan balance, and the one route to added insured financing pays only for the cost of adding housing units. CMHC Refinance, which serves that route for secondary suites in a home the owner or a close relative lives in, states that equity take-out is not permitted. The insured option therefore releases no capital.
CMHC Income Property insurance is a purchase product for non-owner-occupied rentals of 2 to 4 units, with up to 80% LTV and premiums from 1.45% to 2.90% of the loan; its premium table is not applied, because a refinance that releases equity cannot be insured. If the work creates a secondary suite in a home you live in, ask a lender about CMHC Refinance, which is outside this calculator.
Ask a lender or mortgage professional which costs must be paid before the refinance, what happens if the valuation comes in low, and what rate, amortization and prepayment terms you would get. Ask an accountant or tax adviser about interest deductibility when refinance proceeds are taken out, and a lawyer about the purchase and refinance documents. This tool does not trace borrowed funds or calculate tax.
It is purchase plus rehabilitation less the refinance loan. It leaves out the transaction and holding costs not entered in this form, so treat it as an estimate.
Yes. A negative amount means the refinance loan is larger than the purchase and rehabilitation costs entered. It is not a promise that a lender will advance that amount.
The Financial Consumer Agency of Canada says you may usually borrow up to 80% of your home's value. That is the planning ceiling here; your lender decides the actual limit and terms.
No. An insured loan must fund a purchase, repay an existing loan balance or pay for adding housing units, and CMHC Refinance states that equity take-out is not permitted. The insured option shows that result: no capital is released.
Monthly rent less your operating costs and the new loan payment. The payment uses your rate and amortization with interest compounded half-yearly, and the result is before income tax.
It is the Bank of Canada's typical posted 5-year conventional rate, labelled as a typical value with its date. Posted rates are often above negotiated rates, so change it to your own quote.
