Investment Property Mortgages
Whether you are looking for your first investment property or trying to remortgage one of your pre owned investment property, know you CID profile and you should consider following information as a guide to the table below:
YOU CAN USE THE FOLLOWING INFORMATION TO GUIDE YOU:
How Banks Evaluate Mortgage on Investment Properties?
Investment property mortgages can appeal to those who may or may not live in the home but want to increase net worth by acquiring investment property (aka income property), make money, and like the idea of having more than just principal residence. They are also of interest to those who already own other properties and want to re-finance or simply acquire more. The bottom line is smart investing.
Understand the differences as much as you can about mortgages on investment properties and how to leverage your hard-earned money will, no doubt lead to a generous ROI (return on investment). You want to be sure you will maximize your time, energy, and precious dollars! Whether you are looking for your first investment property or trying to remortgage already existing ones, a grasp of the basic principles that influence ROI is just common sense.
Regardless of what financial institution or lender you are working with, this is something you want to be smart about. Lending rules on an investment property are very different than purchasing a residential property.
Approx. 12% is your annual return on investment (ROI).Did You Know The ROI on your 20% of down payment If;
Your monthly rent covers all your expenses and real your real estate value increases by 3% annually.
The minimum required credit score for investment property depends upon your end goal. For the best interest rate on investment property minimum Credit score of 670 is required.
If you are buying an investment property for the short term then credit score may not play that big of a role. Mind you with a credit score lower than 670, you pay higher interest rates.
Fraud is rampant when it comes to investment property mortgages, and only 4% of Canadians invest in rental properties. These two facts combined have had a significant impact on the formation of lending rules in the mortgage industry – especially for investment property mortgages.
Investment Property Mortgages
Minimum equity or down payment should be 20%.
How many properties do you have in mind?
What areas are you considering to buy in?
Are you correctly evaluating the cash flow?
Who is going to do property management?
5 Critical Tips When Applying For a Investment Property Mortgages
- Be prepared to provide lots of documents including rent deposits, property tax statements of all existing properties if need to be. The more organized you are with your docs, the easier it will be for you.
- Every dollar of your rental property mortgage should generate at least $1.20.
- Have ready proof that your down payment is not borrowed by ensuring your bank account has had this money for at least three months. Alternatively, if your down payment is coming from the sale of another property you will need to have documentation of agreement of purchase and sale along with a recent mortgage statement, so your lender is confident about how much money is yours.
- The more properties you acquire the fewer options you will have in terms of prospective lenders who are willing to work with you
- No matter what (even once you are pre-approved), never hold back information from your mortgage broker – it can come back to hurt you later by interfering with your mortgage approval. Remember, we are on your side! Full disclosure helps us to help you.
Optimal Leveraging Is The Key To Success in Real Estate Investing.
Contrary to the general believes the current state of the residential and commercial property market is stable; Acquiring a rental property by leveraging banks money via mortgages will provide you with considerable leverage in your investment. This, in turn, will offer a substantial boost to your return on investment.
What you are aiming for is to use as little of your capital as possible – doing so will allow you to invest in more properties.
Knowledge Is Power
Investing in single family residential investment property is a very different ballgame than buying a primary residence. 20 Down payment (%) is a must if not more. As always, focusing on interest rates alone, even with investment property mortgages, is always a mistake.
You want to carefully consider the bigger picture at hand especially mortgage payment, rental income, mortgage insurance. Default insurance however depends upon the lender to lender and the type of income the borrower has.
Huge home equity in your rental property alone in today’s housing market doesn’t cut it. Borrower’s credit history is one of the three critical elements which will decide the fate of your investment property mortgage.
Self-education is critical to securing the most prosperous arrangement unique to your situation.
As of Jan 01, 2018, every mortgage seeker has to pass the mortgage stress test which enables the financial strength of the borrowers by adding 2% to the contract rates any federally regulated banks offer.
As of June 01, 2021, all mortgages (insured and uninsured) with federally regulated lenders are to be qualified with an interest rate of 5.25% under the stress test. This applies to home buyers with or without 20% of down payment.
This is why a No Fee Mortgage Strategy Session is so important. You can learn facts that typically remain hidden from public view, and leverage Mortgage Delivery Guy’s experience in investing in real estate based strictly on cash flow analysis.
We will discuss your short and long-term rental property mortgage goals and customize a plan to maximize your ROI.
Meet with a mortgage broker on investment property mortgages or for owner-occupied real estate today and learn eye-opening facts that will shape a more prosperous future with higher net worth! We have a holistic approach to real estate investment and will offer competent guidance on the best course of action in managing your multiple mortgages and maximizing your return on investment opportunity (ROI).
Simply click the link below and send us your availability and we will confirm your meeting time and date.