Buying an Rental or investment property is a popular option for Canadians looking at different ways to invest their money. However, unlike the mortgage you took out on your principal residence, financing an investment property is a little more complex. The number of units in the building and whether or not you'll be occupying one of the units are the two major components that control what your financing will look like. Let’s take a look at how Rental property mortgages work in Canada.
Rental Property Mortgages
When you start shopping around for an Rental property, the first thing you need to consider is the number of units your building will have. Most buildings with 1-4 units are zoned residential, so the qualification criteria and financing options from lenders are only slightly different than that of a mortgage similar to what you have on your principal residence. However, buildings with 5 or more units are zoned commercial, so a lender would require that you take out a commercial mortgage on it.
If it’s a multi-unit property, the second thing to consider is if you, the owner, will be living in one of the units or not. If you will be occupying one of the units, the property would be considered owner-occupied. If all of the units will be rented out, your property would be considered non-owner occupied. The major difference between the two is how much of a down payment you need to make.
All claims, terms, and product offerings are subject to qualification and review by either bank or financial institution whichever may apply. We reserve the right to refuse an application if mortgage qualifying criteria are not met upon our or the lender’s discretion. For more information please contact us directly.