Two posts in one day – the new mortgage rules for investment properties in Canada must be big news!
CMHC has changed regulations around how much money a real estate investor has to invest as an initial down paymeny when buying an investment property in Canada. Prior to today, you could put 5% down on a small rental property. Today, you need 20% down for a CMHC insured loan on a rental. Almost every mortgage lender is moving to that standard too.
Many of our clients put down between 20-40% when investing, so this isn’t affecting them, but it is annoying some of our clients who prefer to tie up less than 20% of a property’s equity when investing.
Real Estate Investors – here is the opportunity:
Buy an Investment Property with 15% down payment (on approved credit, etc)
Today, a major lender came out with a program that will allow you to go up to a 85% LTV using a combination of a first and 2nd mortgage – that means that instead of putting down $40,000 on a $200,000 investment property, you can put down $30,000.
Buy an Investment Property with 10% down payment (on approved credit, etc)
Even better, there is an exclusive offer available only to our firm’s members. A major lender has agreed to allow our clients to use a 10% second mortgage, in conjunction with a standard 80% Loan to Value (LTV) mortgage, to purchase small rental properties. We also have private lenders lined up for these 10% second mortgages.
That means that you can invest $20,000 – vs 30k or 40k – in that $200,000 investment property if you want to (and if that is a smart choice for your particular portfolio – call me, we’ll chat). Best of all, you won’t be paying any CMHC premium – like you used to when putting down 10%!
Most investors don’t have access to a loan program like this, so you will have the advantage of better financing terms when negotiating; always a good thing!
For information about properties that you can purchase with a program like this, email me now at Benjamin@BenjaminBach.com
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[...] (Important Update – April 19, 2010: There are now options for you to buy an investment property with less than 20% down, find out the details here: New Investment Property Down Payment Rules in Canada) [...]
[...] (Important Update: There are now options for you to buy an investment property with less than 20% down, find out the details here: New Investment Property Down Payment Rules in Canada) [...]
[...] more information about mortgages for investment properties, read this article: New Investment Property CMHC Mortgage Rules & downpayment options in Canada Share and [...]
[...] Mortgage Insurance Changes Over the past year, Canada’s housing market has proven to be robust. Although the most recent indicators point to a balanced market, the government is taking steps to ensure the stability of the market with efforts to prevent a bubble. The following changes to mortgage insurance will take effect on April 19: 1. Even if borrowers opt for an adjustable rate mortgage, they must qualify for the current fixed-rate mortgage. 2. The maximum equity a borrower can withdraw during a refinance has been lowered from 95 percent to 90 percent of the property value. 3. Down payment requirements have quadrupled for investors who do not intend to occupy the property from 5 percent to 20 percent. For more information about mortgages for investment properties, read this article: New Investment Property CMHC Mortgage Rules & downpayment options in Canada [...]
[...] are a few stories out today about how the Greek Debt Crisis is affecting mortgage rates, and the problems in the Eurozone have also complicated the plans of an investor we represent [...]
[...] Add to that the waves CMHC made in the residential investment by increasing the required downpayment for small residential properties 400% (yes… they really did quadruple the required downpayments! See: New Investment Property CMHC Mortgage Rules & downpayment options in Canada) [...]