If this is your first time buying an investment property it may be overwhelming and exciting at the same time before you begin your search you want to do your due diligence on steps in the process.
Investing in property is always a quick way to streamline your cash flows while building equity on the property. You might be thinking, how will you do that when you file for a mortgage? Well, you can simply use your tenant’s monthly rent to pay off the mortgage while building equity on the asset.
Applying for an investment property mortgage and home mortgage are two different things. The qualifying process for an investment property is centred around two main factors.
- The number of units in a building
- Will you be living in one of those units?
Buildings that have 1-4 units are typically zoned as residential. If your building comes under the label of residential, then the qualification criteria will be less complex. The process is somewhat close to the traditional mortgage application.
Building with 5 or more units will be zoned as commercial. This means that you’ll have to apply for a commercial mortgage.
Living in the same building will be a wise move because then the property will be considered as owner-occupied, but if you don’t live in one of the units in the building, then it will be considered as non-owner occupied, which will directly impact your down payment.
Presently, all investment properties that are non-owner occupied required a minimum down payment of 20%. We’ve given a breakdown of non-owner, and owner-occupied investment properties is as follows:
- Owner-occupied with around 3 to 4 units requires a minimum of 10% down payment and 20% for non-owner occupied
- Owner-occupied with around 1 to 2 units requires a minimum of 5% down payment and 20% for non-owner occupied
The minimum down payment for all owner-occupied properties is now 5% (below $500,000) and 10% of any amount over $500,000.
- Speak to us for expert advice on investing in real estate
- Receive updates on new properties matching your criteria
- Get help with strategy, making an offer and finance options
- Enjoy private viewings, accompanied by your own agent
- Get access to the best legal advisors, surveyors and insurers
you are embarking upon an investment in your future. By putting your money into property, you can ensure a healthy stream of income in the future. But knowing where to start can be hard. We’ve worked alongside our clients for many years, building relationships based on trust and helping them to grow their investments over time.
Our goal is to help you to build for your future, with real estate as the cornerstone of financial security. We take the time to educate all our clients, providing them with extensive coaching and support, so that they are able to analyze potential properties for risk and get the very best value for their real estate investment dollar.
