Submit An Application For A Rental Mortgage

Rental property mortgages are usually taken out by two types of borrowers – buy-and-hold investors and speculative buyers. The requirements for institutional rental property mortgages differ from those for standard mortgages. This mortgage focuses more on the borrower’s net worth and credit rating, down payment, property appraisal, and the presence of renters. If the applicant has two or more rental units, financial institutions want to know how many of them are occupied at present. Property valuation is what many private lenders focus on. If the property you seek to purchase has good rent rolls and an attractive location, the lender will look favorably on you. In case improvements have to be made, you may apply for a second mortgage if there is sufficient equity in the property. Where to apply for a rental property mortgage? Interested in credit? Learn more at this FAQ. There are many mortgage lenders out there, but you may check with a traditional lender first. A bank mortgage is a good choice if you are looking into long-term investment because they come with low interest rates and the longest terms. You can check with hard money lenders as well, but you may be offered a loan with a term of one year or so. On the other hand, while banks offer favorable terms and rates, it is more difficult to obtain a mortgage with them. With rental properties, most banks will extend a loan, which is up to 65% of the purchase price or appraised value, whichever comes lower . In some cases, lenders may agree to give you up to 75 percent, depending on your financial strength and the location of the chosen property. If your project requires more than this, the lender will want that the mortgage is insured through the Canadian Mortgage and Housing Corporation. If you have insurance with the CMHC, you may be offered funding of up to 85 percent. It should be noted that insurance premiums do not come cheap and may reach up to 4.5 percent of the loan amount. Your lender may also require that the property is to be used for residential purposes only. In terms of other qualifications, the revenue you get from renting the property should take care of most of its operating expenses. This includes mortgage payments as well.