Getting you best rental home financing
RENTAL PROPERTY MORTGAGE BASICs FOR ASPIRING REAL ESTATE TYCOONS
Traditional residential rental property mortgage is suitable for borrowers who have good credit and verifiable income. When shopping for a rental property, you are capped at four rental doors plus your principal home if you want to qualify for residential rental property mortgage financing.
If you are buying a non-owner occupied investment property, you will need a minimum of 20% rental property mortgage down payment.
But, if your plan is to live in one of the units, you can get away with as little as 7%-15% down, depending on the total number of units in the building.
On the other hand, if you are refinancing a rental property, the maximum amount of money will get is 75% of the property value, depending on the total number of rental units.
Residential rental property mortgage rates at 25 year amortization are slightly higher than the owner occupied mortgage rates, about .25% - .50%. If you choose 30 year amortization, lenders will add yet another small premium to the interest rate offered.
Buildings with 5 or more units fall under commercial zoning. Investment property mortgage is more complex and is treated as commercial financing with tougher qualification requirements and higher interest rates and other soft costs.
If you are buying a non-owner occupied investment property, you will need a minimum of 20% rental property mortgage down payment.
But, if your plan is to live in one of the units, you can get away with as little as 7%-15% down, depending on the total number of units in the building.
On the other hand, if you are refinancing a rental property, the maximum amount of money will get is 75% of the property value, depending on the total number of rental units.
Residential rental property mortgage rates at 25 year amortization are slightly higher than the owner occupied mortgage rates, about .25% - .50%. If you choose 30 year amortization, lenders will add yet another small premium to the interest rate offered.
Buildings with 5 or more units fall under commercial zoning. Investment property mortgage is more complex and is treated as commercial financing with tougher qualification requirements and higher interest rates and other soft costs.
WHAT IF I DON'T FIT TRADITIONAL RENTAL PROPERTY MORTGAGE LOANS? WE'VE GOT YOU
When you do not fit traditional rental property mortgage loans because of credit problems or you are self employed and cannot prove income on your tax returns, we have alternative lending solutions for you too.
Alternative mortgage lenders are more flexible and offer common sense mortgage solutions to help you grow your income property assets. The interest rates are higher but that is not as important when you consider rental property mortgage interest deduction benefits on your CRA tax returns.
Alternative lenders will accept a lower credit score and allow up to a maximum of 8 rental properties/doors. Depending on the area, you will need a minimum of 25% rental property mortgage down payment to buy or up to 75% to refinance.
Alternative mortgage lenders focus on the property type and condition, area as well as your ability to make mortgage payments. Your credit score and history will also contribute to their decision of how much money they will give you.
Mixed-use properties, 50% commercial such as a store front with upper level apartments, are also candidates for alternate mortgage financing. These types of lenders will consider financing mixed-use buildings up to 65% of appraised value, depending on location, condition, and rental income.
If you are considering a rural property on well and septic with acreage (up to 10 acres), the maximum loan amount you will get is 65% of property value, or less, depending on how far you go outside of city limits.
Your property must be within 50 km of a large urban center with population over 100,000 or, within 10 km of medium population center with population over 30,000.
What if you have bad credit or are a discharged bankrupt?
We can turn to private mortgage lenders to get the job done. Private lenders may be willing to step up to the plate if the property is marketable, you have enough equity and the ability to make payments.
Often private lenders step up to the table and say YES when everyone else said NO. The interest rates and fees can seem expensive, but this type of financing can resolve your short-term financing problems (usually 1-year).
The best thing to do is to give us a call to get started. We will custom fit a strategy for your rental property mortgage in Ontario.
Alternative mortgage lenders are more flexible and offer common sense mortgage solutions to help you grow your income property assets. The interest rates are higher but that is not as important when you consider rental property mortgage interest deduction benefits on your CRA tax returns.
Alternative lenders will accept a lower credit score and allow up to a maximum of 8 rental properties/doors. Depending on the area, you will need a minimum of 25% rental property mortgage down payment to buy or up to 75% to refinance.
Alternative mortgage lenders focus on the property type and condition, area as well as your ability to make mortgage payments. Your credit score and history will also contribute to their decision of how much money they will give you.
Mixed-use properties, 50% commercial such as a store front with upper level apartments, are also candidates for alternate mortgage financing. These types of lenders will consider financing mixed-use buildings up to 65% of appraised value, depending on location, condition, and rental income.
If you are considering a rural property on well and septic with acreage (up to 10 acres), the maximum loan amount you will get is 65% of property value, or less, depending on how far you go outside of city limits.
Your property must be within 50 km of a large urban center with population over 100,000 or, within 10 km of medium population center with population over 30,000.
What if you have bad credit or are a discharged bankrupt?
We can turn to private mortgage lenders to get the job done. Private lenders may be willing to step up to the plate if the property is marketable, you have enough equity and the ability to make payments.
Often private lenders step up to the table and say YES when everyone else said NO. The interest rates and fees can seem expensive, but this type of financing can resolve your short-term financing problems (usually 1-year).
The best thing to do is to give us a call to get started. We will custom fit a strategy for your rental property mortgage in Ontario.
