There have been many changes in the mortgage marketplace and I wanted to take this opportunity to review lending for investment properties.

 

·         Maximum mortgage amount is 80% of property value (non-owner occupied property)

·         Maximum 4 unit property

·         Almost all lenders require mortgage insurance if the loan to value is greater than 75%  (this is not a government regulation but lender policy)

-the insurance premium is payable by the borrower

-premiums on rental properties are higher than premiums for owner-occupied properties

·         Many lenders require a 35% down in order to avoid the insurance premium

·         Rental income:  if an appraiser’s rental assessment is required for determining rental income (no lease available) the lender may require a larger down payment.

·         Down payment:  must be from borrower’s own resources ….no gifted down payment allowed.

 

If you are working with buyers interested in rental properties, it’s really important to have them speak with their mortgage lender.  With the recent changes in government rules and lender’s risk parameters being constantly reviewed/revised, your buyer may not know they no longer qualify for the mortgage they had preapproved.  A mortgage preapproval is not guaranteed when the lender changes lending policy…..the lender will honour a final mortgage commitment but not a preapproval.

 

 

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Contact me to find out more about Toronto Modern Real Estate or acquiring a Hive Modular home.


Anne Lok Sales Representative, Homelife/Realty One Ltd. Brokerage
Tel: 416-922-5533 | Mobile: 416-799-9632
www.annelok.com

 

Toronto Modern Homes and Condos

 
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3 Comments on How does the change in mortgage rules affect buying rental property?

OCT
24
1,450,126 Points 46 Featured Posts Outside Blog Called Shot Master
Thanks for the information. I will check the policy with our local lenders.
7:18am • #1
835,996 Points 69 Featured Posts Outside Blog Called Shot Master

Good awareness post on the subject matter...rental property works very well as an investment too
7:18am • #2
759,076 Points 13 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp

It is interesting to see rules and regulations in other countries. Enjoyed the post and thank you for the information. I am sure agents in Canada will find it helpful as well
7:51am • #3

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Anne Lok

Anne Lok

Toronto, ON

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Homelife Realty One Ltd.

Address: 501 Parliament Street, Toronto, ON, M4X 1P3

Office Phone: (416) 922-5533

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