Buying a rental property in today's market

If you are looking to buy a rental property, it is important to note that there have been several changes over the past few years. Here are the basics of what you should know:

·         You will need a down payment of at least 20%

·         Some lenders will no longer finance rental properties at all

·         Some lenders are charging the default insurance premiums to the client, regardless of the loan to value ratio

·         You can expect a slightly higher interest rate

·         Remember that you are not able to claim the Home Owner’s Grant on rentals, so you will have to factor in an addition $770 annually into your budget

·         You can expect slightly higher home insurance premiums

·         For “subject properties”, typically only 50% of the rental income can be added to the applicant’s gross annual income for qualifying purposes. All other expenses including property taxes and heat must be including as liabilities

·         Some lenders have a maximum amount of properties one applicant can own

·         In Prince George, you will need to purchase a business license for your rental

·         You will want to have a good record keeping system to provide to your accountant at the end of the year as you will have to pay taxes on any income earned

Rental properties can be a great investment but it is important to have all of your ducks in a row prior to looking at potential properties. It is considered to be a higher risk mortgage, so overall you can expect to jump through a few more hoops, regardless of the lender.

For more information or for any mortgage related questions at all – please feel free to contact me today.

www.christinebuemann.com