Rental Properties: How the new mortgage guidelines affect your buying power, by Richard Batke, Mortgage Broker, Penticton and Summerland BC

By
Mortgage and Lending with Invis - Richard Batke, Residential Mortgage Broker

Rental Properties: How the new mortgage guidelines affect your buying power, by Richard Batke, Mortgage Broker, Penticton and Summerland BC

Purchasing Power and Rental Properties - How have the new mortgage lending guidelines in Canada affected you?

The Following comparison is using today's mortgage interest rates for all calculations.

Invis - Wilkins & Associates Mortgage Brokers




Example 1: Non Owner Occupied Rental Property

Before April 19 Mortgage Lending Changes:

For Someone qualified to carry a mortgage payment of $1200/month for a rental property that has $1200/month income:

1. $237 900 purchase price with 5%
    down payment

2. $313 000 purchase price with 20%
    down payment

Rental Home

After April 19 Mortgage Lending Changes:

1. 5% down payment no longer available - 20% down payment minimum

2. $127 500 purchase price with 20% down for most lenders.

3. $313 000 purchase price for a select few lenders.

Interest Rate Leverage



Summary:

CMHC is no longer participating in the non owner occupied rental market. This means that you must have a minimum of 20% down to invest in real estate.

It is also more important that ever for you to be aware of the lending policies of the many different mortgage lenders.

They can simply tell you that you are not qualified for your purchase because they are one of the vast majority of lenders that no longer allow you to get the maximum benefit from the income of your rental property.

Example 2: Owner Occupied Rental PropertyLine

Principal residence purchase with a self contained rental suite. This is also true for a duplex, triplex and fourplex.

Before April 19 Mortgage Lending Changes:

For Someone qualified to carry a mortgage payment of $1800/month:

1. $395 400 purchase price with 5% down
    payment

2. $531 600 purchase price with 5% down
    payment, $800/mo rental income from
    suite

3. $631 250 purchase price with 20% down
    payment, $800/mo rental income from
    suite

rental income

After April 19 Mortgage Lending Changes:

1. $395 400 purchase price with 5% down
payment

2. $421 000 purchase price with 5% down
payment, 800/mo rental income from
suite

3. $631 250 purchase price with 20% down
payment, 800/mo rental income from
suite

 

Interest Rate Leverage



Summary:

For owner occupied rental properties, your purchasing power has been significantly reduced if you do not have a minimum 20% down payment. This does not negate the benefit you receive by using a rental suite to pay your mortgage down faster! We are evaluating purchasing power only.

In this example, there was over $110 000 reduction in your buying power!





Overall Summary:

The new mortgage lending guidelines are ensuring that those who have equity are the ones who enjoy the maximum leverage from their resources. You need to become one of them, and I can help you get there.

Furthermore, different mortgage lenders evaluate loan obligations differently, some allow child tax benefits and UCC as income, some don't. The days of simple mortgage underwriting are gone, so make sure that you have a well trained and experienced mortgage broker in your corner.

Whatever you do, do not limit yourself to 1 or 2 banks. In order to be sure that you are getting the best mortgage, you need to have access to many lenders. I have access to more than 80.

Now more than ever it is critically important to use the services of a Mortgage Broker who is not only experienced and intimately acquainted with the individual lender's policies but one who has access to the few lenders who will continue to offer the previous rental income model.

This is not an extraordinary change, it is returning to similar guidelines we have experienced in the past, though we can still have a minimum down payment of 5%, rather than the old policy of 20% from years gone by.

The real estate market will adjust to these changes and
the market will find its equilibrium once again.

 

Richard Batke Richard Batke - Mortgage Broker

2004 Main St. Penticton, BC V2A 5H4

Direct: 250-809-0285
email: richardbatke@invis.ca
web: www.richardbatke.com
blog: www.southokanaganmortgages.com
map: 2004 Main St., Penticton, BC

Richard Batke Richard Batke Mortgage Broker

* Purchase * Refinance * Renew * Debt Consolidation *
* Business Equipment Leasing *

Serving the South Okanagan, including:

Summerland BC | Penticton BC | Naramata BC | Okanagan Falls BC | Oliver BC
Osooyoos BC | Keremeos BC | Princeton BC


View Larger Map
close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Lending / Financial
Location:
British Columbia Okanagan-Similkameen Penticton
Groups:
Canadian Mortgages
Okanagan Similkameen Connection
Tags:
mortgage lending changes
rental and investment properties

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
40,092

Richard Batke

Ask me a question
*
*
*
*
Spam prevention