Mortgage in U.S. or Canadian dollars?

Q – My wife and I will be purchasing a condo in Florida in the spring. We also will be renewing the mortgage in our Oakville, Ontario home at that same time. We will require a mortgage of US$45,000 on the condo. The condo will not be rented. Our home has sufficient equity to take cash out so that no mortgage will be necessary on the Florida condo. Do you recommend this strategy or should we take the mortgage on the Florida property and avoid increasing the mortgage on our home? – D. and R.P.

A – I had to deal with exactly this same situation a few years back when we bought our Florida place. I opted to increase the mortgage on my Toronto home, even though the interest rate was a bit higher. The reason was that I didn’t want to take on a debt in U.S. dollars, given the chronic weakness of the loonie. It turned out to be the right choice – our dollar was at US$0.72 at the time.

Also, Canadians sometimes have difficulty getting mortgages in the States. Many lenders won’t deal with non-resident clients. Increasing the mortgage on your Oakville home will avoid that problem. – G.P.