Buying an investment property can be a great opportunity. However, investment property ownership isn't for everyone. Along with the potential benefits come potential concerns; from legal to financial, so it's a sound idea to consult a financial advisor, a lawyer and an accountant prior to considering an investment property purchase.
Because investment property mortgages are subject to specific governmental requirements, mortgages are constantly changing. It's a good idea to consult with an experienced mortgage specialist who will help you make an informed decision about your investment property mortgage options.
When buying an investment property, the first questions to answer are: How many units are there in the building? and Will you be occupying one of the units?
Most buildings with 1-4 units are zoned residential, and buildings with 5 or more units are zoned commercial, so a lender would require that you take out a commercial mortgage on it. With a commercial mortgage, the qualification criteria is even tougher to meet and interest rates are often much higher.
If you will be occupying one of the units, the property would be considered owner-occupied. If all of the units will be rented out, your property would be considered non-owner occupied. The major difference between the two is how much of a down payment you need to make:
The building has 1-2 units, and ONE of them is owner-occupied, min downpayment required is 5%
The building has 1-2 units, and NONE of them is owner-occupied, min downpayment required is 20%
The building has 3-4 units, and ONE of them is owner-occupied, min downpayment required is 10%
The building has 3-4 units, and NONE of them is owner-occupied, min downpayment required is 20%
Give us a call today at 647-893-2535 or fill out the form on the top so we can discuss the rest of the details such as:
• If you would need to pay mortgage default insurance
• Qualification criteria and what documents the lender will require
• The 3 Debt serving ratios you should be aware : Rental Offset, Rental Inclusion, and Debt Service Coverage Ratio
Information provided by Snezhana Todorova, Mortgage Agent, Lic #M13000122. Dominion Lending Centres Mortgage Watch Lic#12044.
Snezhana can be reached at 647-893-2535 or firstname.lastname@example.org