• Investment Property Financing: What to Buy and How to Qualify | Amina’s Mortgage Services

  • Planning on buying a rental property?
    Need residential or commercial investment property financing?
    Looking to invest in Canada or the US?

    You've come to the right place!

    Many investors are purchasing income-generating properties – as rent to own properties, buy and hold, as well as flips. While others are investing in commercial properties, like mixed-use, small or large apartment buildings, and shopping plazas.

    Whatever you're interested in purchasing, having a licensed mortgage broker and one who invests in properties as well, is a smart strategy.

  • Here are some of the many ways I can help you

    • Analyzing the best markets and property types to invest in – not all markets offer the same opportunities for long-term growth or cash-flow
    • Finding you a qualified tenant buyer who has the required deposit for your rent-to-own property
    • As you grow your investment portfolio, you may progress to using OPM (other people’s money) or purchasing properties through a JV (Joint Venture) agreement because you may not be able to qualify for financing. I can help you find a JV partner, who either has the money, can qualify on title or both
    • Sourcing you financing depending on where you are in your investing journey
    • Helping you finance commercial property investments with access to the largest database of commercial lenders in Canada and the US.
  • I'll also conduct an analysis and provide you with a free report, which shows you:

    • You best mortgage options based on your current credit and debt ratios
    • How to grow your portfolio by taking your deal to the right lenders in the right order – this can make or break you!
    • A thorough analysis of both your proposed property and the market you wish to invest in
    • Other options that can provide excellent returns without you being a landlord
  • Buying a rental property

    When buying a rental property, you'll often be required to put down up to 20%-25% of the purchase price. If, however, you plan to live in part of the property, you may qualify for an owner-occupied rental mortgage, with down payments as low as 5%.*

    Properties at or below 4 units are traditionally regarded as residential investment mortgages and treated like any other residential mortgage, with the exception of the requirement of a 20-25% down payment.

    Properties with 5 or more units are treated as commercial and have vastly different requirements. See the Commercial mortgage page for more information.

    *You can qualify for 5% as long as the purchase price is under $500,000 but you must qualify at the benchmark rate (currently 4.64%) under the new rules of November 30, 2016. Furthermore, single family rentals are now uninsured, thus face rate premiums and a maximum of 30 year amortizations.

  • What's required to qualify?

    Canada's new mortgage rules and terminology can be confusing. Before November 30, 2016, we assessed a purchase as Conventional or High Ratio. Now we need to look at a purchase as Insurable or Un-Insurable.

    So, how does this affect you?

    If your deal is Insured, meaning it's insured by CMHC or Genworth, the following parameters apply:

    • The purchase price must be less than $1 million
    • The mortgage must be a purchase or transfer
    • The minimum Beacon score must be 600
    • Debt ratio are max GDS -39% or TDS 44%
    • You must qualify at the benchmark rate (currently, 4.64%) and you can pick a variable or fixed rate
    • The maximum amortization is 25 years
    • Rentals – only 2-4 units allowed
    • Transfers with a previous policy in place are allowed to maintain the existing schedule up to 35 years
    • Transfers that don't have an existing policy in place must have a remaining amortization of 25 years or less

    If your deal is Un-Insured, meaning it's not insured by CMHC or Genworth, the following parameters apply:

    • All refinance and/or equity take out mortgages will no longer be insured
    • If the deal is conventional (80% or less) you can still qualify at the 5-year contract rate
    • All mortgages valued at $1 million or greater will be un-insurable
    • Depending on the lender, if the amortization exceeds 25 years (some still offer 35 year amortizations), you will be un-insured
    • Single-unit rentals are now un-insurable (with certain lenders there will also be a rate premium added to the rental purchase)

    Let’s look at an example of an Insured purchase of a client purchasing a rental property (2-4 units):

    Purchase  $675,000
    Down payment (20%) $135,000
    Mortgage     $540,000
    Qualifying rate 4.64%

    Variable rate is prime -.35%, however single-family rentals are now charged an extra 25bps premium (depending on the lender)

    Variable rate  2.60%
    Amortization  25 years
    Monthly payment  $2,445.99

              

  • How Amina's Mortgage Services Can Help?

    As a licensed mortgage broker, located in Newmarket, Ontario, I've got a trusted, long term working relationship with over 40 different mortgage lenders. Even better, as well as being able to source you the best possible investment property mortgage solutions, I help my clients protect their credit rating by pulling one credit bureau prior to forwarding your application to potential lenders.

  • The Next Step

    Do you want to know what your numbers might look like under these new rules? I can do an analysis for you on your next property so you can get ahead of the mortgage rules, figure out how to qualify and what to buy!

    Give me a call today at 416-697-5443 or email me at [email protected]

  •