A guide to your investment and rental property mortgage in Canada

The investment and rental property mortgage landscape in Canada is interesting to say the least, frustrating and inconsistent to say more, and yet still very good and healthy to say the most.  Obtaining an investment and rental property mortgage in Canada can be a very positive, clear, and excellent experience if you understand the underlying fundamentals that banks and trust companies are now using for your approval along with having someone with a strong investment and rental property mortgage background to help guide you.  The biggest transition in this lending field that we have seen in the past couple of years is the decrease in the number of lenders who are willing to lend for clients who have multiple investment and rental property mortgages.

For clients purchasing their first investment property it tends to be a relatively straightforward process, for these clients we are able to ensure their investment and rental property mortgage is put together quickly, clearly, and with excellent rates and terms.  The second group of client, namely the ones who own multiple rental properties are the ones that are now experiencing the seismic shift we have seen in the investment and rental property mortgage lending market. – lets call these lenders the sophisticated investors…

Investment and rental property mortgage structuring for sophisticated investors:

The lending field for our sophisticated investor clients used to be plentiful with lenders who were willing to use strong rental offsets, debt coverage spreadsheets, and portfolio based underwriting techniques.  Unfortunately for the investors who are now obtaining an investment and rental property mortgage these lending options have decreased from about seven lenders to three.   That being said the three remaining lenders can be great fit for you if you are working with someone who has experience and knowledge in their underwriting techniques and options.  The new methodology of completing your sophisticated rental portfolio mortgages relies upon debt coverage ratios or net positive tax returns.  Debt coverage ratios  (DCR)  are best explained by an example: if you had property revenue of $1100 and expenses of $1000, your DCR would be 1.1 ($1100/$1000).  The other method we can employ is using your personal/ corporate tax returns to show your rental properties have a net positive cash flow at year end.  The investment and rental property mortgage options for sophisticated portfolios have become increasingly narrow, however at the same time we have had great success leveraging our experience and relationships to obtain mortgages for many of these exact clients.

If you are purchasing your first investment property, tenth, or more, I would be happy to discuss your investment and rental property mortgage options and structuring with you.

Rylan Hahn PH 403-802-7201 for your best investment and rental property mortgage options.