So I, like many are stuck wanting to own a home but do not want to live outside of the downtown core or can afford to own in Vancouver. Therefore my options are few. Therefore I have decided to Buy to Rent. Here are some tips I found helpful when getting ready to get into the Rental game:
1. Expect to put down a larger down payment
- Most lenders will expect you put at least 20% down of the purchase price of the home
- Each lender will allow you to declare a certain amount of rental income when qualifying for a mortgage. Also that each lender will loan a specific amount compared to your Total Debt Ratio and Gross Debt Ratio. Each Ratio is a calculation of your monthly spending. Most lenders will only lend up to 40% of your TDS, but some offer 42%. That 2% could be the difference you need to get a mortgage. Speak to a Mortgage Broker, like myself, to find out which one works best for YOU.
3. How many properties do you want to take care of?
- The morre properties you own the more risk the Lender must take on when committing to a Mortgage. Work with the stricter Lenders for your first few properties then switch to more lenient lender as you buy more. A Broker can advise you of which lenders to use.
- Lenders will want to see a signed lease, and proof or rental income and 2 years of tax returns to prove a net gain or loss
- have flexible rental income rules
- allows you to carry a greater debt ratio
- lets you put a property in a company name for liability protection
- lets you finance more than four or five properties
- doesn’t impose a minimum net worth requirement
- allows 30 amortizations to maximize your cash flow
- lets you prove rental income with “market rent” appraisals
- allows a gifted or borrowed down payment
- allows second mortgage
- Lends on large mortgages
- has a low minimum credit score
- allows rental income from suites that don’t conform with current municipal bylaws
- provides cash back
- allows you to add a vendor take-back mortgage
- offers a line of credit with your rental mortgage
- pays for your switching fees
6. Pick the right Mortgage Broker
Thanks and Good Luck!
exerts from – http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/buying-a-rental-property-how-the-financing-game-has-changed/article6137071/