Investment Property Mortgage Loan

Investment Property Mortgage Loans

If you are looking to buy a property as an investment but do not have the cash on hand to make an immediate purchase, you will need to take out a mortgage to buy it, much like you would if you were buying a house for yourself to live in. However, mortgages for investment properties work in a slightly different way than mortgages for primary residences do.

The Ins and Outs of Investment Property Mortgages
First of all, the number of units determines the zoning for your property. If your property has four units or fewer, then it will likely be in an area zoned residential. This is good because the residential mortgage qualifications are less stringent than those for a commercial property, and you can generally find an interest rate that is close to the rock bottom rates that primary residence mortgages are going for. If there are five or more units, the property will have commercial zoning, which means you have to get a commercial mortgage — with higher interest rates and a tougher approval process.

Also, if you plan to live on site, then the mortgage is treated as an owner-occupied property. You can get away with a down payment as little as 5 percent this way. If you don’t plan to live there, though, that down payment requirement goes up 20 percent.

Investment Property Mortgage Loans

But what if you can’t get bank approval? Private lenders are also available to help you finance your purchase. In this case, you will likely have to put down at least 15 percent if you plan to occupy, and as high as 30 to 40 percent if you don’t, but you also don’t have to go through the credit approval process. Instead of using your financial background, private lenders use the value of the property to determine whether the loan is a sound investment or not. The reason for the higher down payment is to ensure that, in case of default, the lender can get his money out of the sale through the foreclosure process.

Amansad Financial has relationships with a number of different private lenders who are looking to invest in the real estate market. If you think that this would be a helpful process for you, give one of our investment mortgage specialists a call today. We will discuss your present situation and decide if your credit profile merits a call to a private lender. We have helped multiple clients in western Canada and look forward to working with you.

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