The Money Management
Confused about mortgage financing
for a rental property?
For the last several years, relatively weak stock markets have changed
the way many Canadians are investing their hard earned dollars. More and
more Canadians are venturing into the rental property market, some swayed
by the real estate appreciation that we've seen over the last few years.
Others want to add real estate to their investment mix to better diversify
Investors who consider adding real estate assets are often confused about
their mortgage financing options. Many investors who put 15 per cent down
use an insured mortgage, but the cost of the insurance premium can be
high. Even so, not all investors can meet the strict requirements that
go along with an insured mortgage on rental property.
Another option if you have a good amount of equity in your principal
residence is to take some of the equity out, typically through a line
of credit, to get a big enough downpayment that may qualify you for a
regular first mortgage.
Some lenders have designed new mortgage products and services that simplify
the process, one such product specifically designed for small investors
interested in a residential investment property. Investors can access
up to $600,000 with as little as 15% down without mortgage insurance or
leveraging the equity in their principal home.
Perhaps now more Canadians can heed the wisdom offered by many financial
professionals and diversify, diversify, diversify by including real estate
in their investment portfolios.
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, Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.