INVESTMENT PROPERTY MORTGAGE
ARE YOU CONSIDERING AN INVESTMENT PROPERTY?
Many people dream of owning an investment property but aren’t sure how to navigate the entire process. An investment property mortgage is a great way to get started in the investment property market and build wealth. It offers the investor many benefits, such as the potential for appreciation and positive cash flow. Our experts will guide you through a steady process of being financially free through our expertise in landing an investment property loan.
AG Mortgage Team can help you in more than one way to finance an investment property. We will create a customized plan according to your cash flow requirements, the term of possessing the property, and the capital you are prepared to invest.
UNDERSTANDING INVESTMENT PROPERTY MORTGAGES
An investment property mortgage is a loan offered to real estate investors who want to hold rental properties. It may not seem easy to get an investment property mortgage, but the good news is that you can get your hands on an investment property mortgage if you meet specific qualifications. To qualify for an investment property mortgage, you must provide documentation that proves both the income from your rental properties and the ability to maintain it with liquid assets in times when they are not generating profit, such as during the first six months from the date of holding the property or during renovation.
RESIDENTIAL PROPERTY MORTGAGE VS INVESTMENT PROPERTY MORTGAGE
HIGHER CREDIT SCORE
You need the minimum credit score to be qualified for an investment property. A 620 will do just fine for the main house regarding getting conventional financing. Still, the minimum credit score for an investment property with a fixed-rate or adjustable-rate mortgage may range.
HIGHER DOWN PAYMENT
For those looking to invest in property, the financial stability needed is much greater than what’s required for residential homes, especially for rented properties. Most mortgage lenders will require at least a 15-20% down payment regarding investment homes in Toronto. However, usually, this is not necessarily required for first-time homebuyers.
POSSIBLE HIGHER INTEREST RATE
Also, financing an investment property will potentially require a higher interest rate, as lenders consider investment homes to have a higher risk than residential homes.
Instead of being discouraged by all these factors, you should know that it doesn’t stand against a successful investment property. You should know that you will gain excess costs in the long term if the procedures are entitled to the right person. With rental income, you can make money to pay off your mortgage and build sustainable income stream.
RESIDENTIAL PROPERTY MORTGAGE VS INVESTMENT PROPERTY MORTGAGE
Here are some other points that will give you the advantage when applying for investment property mortgages.
GETTING PRE-APPROVED FOR A MORTGAGE IN TORONTO
Having a prequalification will help guide your search. It’s not the same as getting approved for an actual mortgage. Receiving preapproval means you have a head start on your next property search. Not only will it provide you with an accurate estimate of how much money can be allocated during each phase but being approved first provides that slight edge needed to make more competitive offers.
HOUSE FLIPPING ANALYSIS
You may be considering taking out an investment property mortgage for a low-valued property, with plans to upgrade and renovate. You should first evaluate all the costs and benefits associated with this decision. It would be best to think about how much renovations will cost compared to what you expected from such renovation and the property’s value.
RESIDENTIAL HOMES ARE NOT INVESTMENT PROPERTIES
It’s a misconception that residential property can be investible enough, but investment properties have a different function as they will be rented or leased.
SEARCH FOR THE BEST LENDER
Finding the right lender for investment owners can be difficult. AG Mortgage Team can help navigate you so that you can save money.
CONSIDER YOUR LIQUID ASSETS
To qualify for a mortgage, you will need to provide evidence of savings or liquid assets that you can easily convert into cash. The required amount should cover at least six months’ worth of expenses to sustain your investment property and ensure enough security before applying for a mortgage.
More mortgage options for investment properties in Toronto:
Home Equity Line:
You can use your home equity to pay for the investment property, which is a secure tactic regarding investment for a short period.
Interest-Only Mortgage
With this mortgage, you will be required to interest-only payments, which will help you gain more money from your property, especially if you have an investment for a short period.
Conventional Mortgage
The AG Mortgage Team can get you a conventional mortgage for your investment property.
Your down payment is the most critical factor in obtaining a long-term return on your investment. AG Mortgage Team will determine the best cost-efficient down payment according to the property’s value alongside its potential income. More costs might not always be the best decision.
PROCEDURE OF BUYING HOME
REQUIRED DOCUMENTS FOR YOUR MORTGAGE
Current employment status and income amount as:
- Copy of current payroll.
- Proof of current electronic deposited pay.
- Associated Notice of Assessment (NOA) & T1 General.
- Additional income sources (if any).
- Prior employment status (if required).
- A List of your current assets and obligations.
- Bank account alongside transit number for payments.
- CIBC Pre-approved Mortgage Certificate (if valid).
- Statement of investments from within the latest 90 days or savings.
- Withdrawing an amount from RRSP through Homebuyer’s Plan (if valid).
- Gift letter.
- Copy of the sale agreement of a sold current asset.
- A copy of the real estate listing.
- A copy of the sale agreement and accepted purchase.
- Full address of the property (legal description and postal code).
- Tax estimates of the property, heating costs, and condo fees (commonly, you may find these details on the real estate listing).
- Well and septic certificate regarding rural properties.
- Lawyer’s full details (name – address – telephone and fax number – postal code).
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