It is important to remember that a mortgage is attached to an appreciating asset. Historically, despite temporary dips, real estate goes up in value over the years. The average house price in Canada was about $60,000 in 1980 and just under $250,000 in 2006 (a luxury car that was purchased for $20,000 in 1980 would be lucky to sell for $2,000 today). With a bit of research and due diligence, real estate is almost always a good investment.
Mortgages are usually the lowest interest loan that a consumer has access to. The combination of the low interest, long-term repayment schedule, and the appreciation in value in the actual property offers a good opportunity for would-be investors. Most Ottawa mortgage holders are resident owners who no longer want to pay rent. They have decided that they prefer to invest in themselves, rather than pay someone else’s mortgage.
Some Ottawa mortgages are taken out by real estate investors who plan to cover their mortgage payments, property taxes, and maintenance costs through rental income. They take advantage of the fact that real estate rises in value over the years, cover their costs by renting out the properties, and may even generate a revenue profit. Many of these investors began by taking out a loan on the equity built up in their personal home and used it to leverage investment mortgages. When possible, they take advantage of the tax breaks generated by the Smith Maneuver.