If we are to look at the current housing rental market in Canada, a real estate reporter of The Globe and Mail, Tamsin McMahon published a report in December 2015 that a lot of Canadian condominium buildings are being purchased by foreign investors.
According to McMahon, based on the figures released by Canada Mortgage and Housing Corporation, six cities including Vancouver, Winnipeg and Toronto had shown a substantial increase in unit ownership by foreign investors.
What this tells us is that investors are buying multi-residential properties and are counting on the property to generate income for them.
Having said this, if you are planning to purchase an investment property such as a condominium building, you are to check a couple of things including your budget and your financial plan. How are you going to put this purchase plan into reality?
The first step is to find a reputable mortgage specialist who will help you in the assessment of the financial aspects of your investment purchase plan. It is vital that you choose one with unquestionable experience and expertise in the field as not all banks or financial institutions are easy to deal with especially on construction loans. You will require someone who can provide you with essential information that will make it easier for lenders to approve your application.
If your target investment property is in Toronto, your best bet would be a mortgage consultant specializing in Toronto properties, the advantage being, your consultant knows the area so well that they – your mortgage consultant, would be able to give you good advice on not just the financial aspects but also on housing trends and real estate market statistics.
Your mortgage consultant is likely to tell you that your best financing option when buying an investment property is the Multi-Residential Mortgage. The mortgage specialist will start by assessing the required funding for the investment property against your financial profile. This would help them match your profile and project funding requirements with lenders that cater to multi-residential mortgages. This way, no time is wasted in negotiating with various lenders that only approve certain types of mortgages.
Getting approved for an optimal funding option for your investment property will require the following considerations from your end:
- Your investment property is expected to generate an income equivalent to approximately 30% for every dollar of debt
- You should be able to show that your financial profile equates to 25% of the funding availed
- Income generated by the investment property should be enough to cover mortgage payments and the property’s operating expenses
With proper advice from your mortgage consultant, you are bound to get approved for a multi-residential mortgage at a competitive and viable rate, giving you access to funds that will also allow you to do improvements on the property to increase its value and income.
You need to remember that the key to obtaining a viable funding for your investment property is working with someone who is experienced and has built long years of relationships with banks, financial institutions or lenders in the area where your property is located. Their local presence and experience will prove valuable to you throughout the financing process.
This is the right way to do it, if you’re planning to snap up an investment property in Canada.