Acquiring an Investment Property
Buying a property and renting it out can be a good way to steadily build wealth. Whether you’re looking to acquire a condo, house, multi-unit property to add to your investments, planning a successful venture starts with understanding your mortgage financing options.
There are unique aspects to financing rental properties: mortgage lenders typically expect a down payment of at least 20% for a conventional mortgage. Another option is to draw on the equity from your principle residence or another rental property. What many prospective buyers don’t know is that there are lenders that will allow up to 80 per cent of monthly rental revenue as “other income” when approving a buyer for financing. Lenders have various rules when using rental income to help you qualify. Allow us to help you find the “right” lender.
At Invis-Feisal & Associates we can introduce you to your mortgage financing choices and can offer guidance on the ins and outs of financing investment properties. In addition, your accountant can advise on the tax implications and risks involved in your investment, and your realtor can help with collecting sound information about local rental and real estate markets.
Buying a Vacation Home
While recreational property may seem out of reach for many, there are mortgage strategies to help you acquire a cottage for your family to enjoy, for a lifetime.
Whether your preference is a cottage or resort condo, in most cases you should be able to obtain mortgage financing on a second home at a rate that is competitive with what you are paying on your principal residence.
When qualifying for vacation home financing, the lender will simply add the new mortgage payment onto your total monthly debt payments – if these do not exceed 42% of total monthly household income, the loan will most likely be approved.
About one third of those who have a secondary home use their properties as an income-producing vehicle. In the case of a vacation property that you intend to rent out most of the time, the lender may deduct the rental income from your total monthly debt payments – at Invis-Feisal & Associates we can let you know about a particular lender’s policy on rental income.
A vacation home is more than just a luxury item – it can be a solid real estate investment that appreciates over time. Best of all, you’ll have a retreat that offers peace and tranquility not often found in the city.
“The Invis-Feisal & Associates team has been professional, knowledgeable and very willing to help at all stages of the mortgage process and beyond! We’ll be referring and returning for your help.”
– Gail M.