Rental properties require a 20% down payment.
Many dream of owning a home. And there are others that dream of owning many homes. History has shown us that many have prospered from the wealth created by owning real estate.
And what’s not to love – you buy a home, find a tenant, and someone else pays the mortgage while the value of the home inherently continues to grow. There is maintenance, taxes and other fees, but if done properly, the property will have positive cash flow (rent greater than mortgage payments and expenses) for the investor.
All sounds easy, but financing additional property at lowest interest rates is not so common sense from a lender’s perspective.
They apply more conservative measures in many cases, or ask for more down payment. Mortgage rules now require a minimum 20% down in order to buy and finance an investment property. Some lenders will request more than this.
There are a variety of ways to structure an application for a rental property, and knowing which lenders are most receptive to rental applications is critical as you grow your portfolio of properties.
Know your options
Working with a trusted advisor that has many lenders available to them is never a bad thing. A mortgage broker can locate financing with a variety of lenders at best rates, or rates that may be a bit higher due to the circumstances of the file, but there are more options available in case you don’t fit the traditional bank box.
Having someone who is familiar with the various lenders and their policies can potentially make or break the dreams of those wanting to invest in real estate, and could save you thousands of dollars in interest. You owe it to yourself to speak to someone who knows and specializes in rental properties, and our office does just that.
If you’re thinking of investing in real estate, whether it be adding a basement apartment, buying a multi-unit home to live in or a standalone rental property, we have the knowledge and team to help you with your financing questions. Call us today to review your needs and see how much interest we can save you on your next purchase.