Rental property financing will change dramatically on April 19.
Here are the new rental mortgage rules, as decreed by the federal government.
For a take on these changes we spoke with mortgage planner, speaker, and author, Peter Kinch. Peter was the top Canadian broker in 2008 by volume, according to Canadian Mortgage Professional Magazine, and is a major participant in the rental financing market.
See –> Peter Kinch Interview…
Peter seems to sum things up well. I can’t understand for the life of me how the government can label all real estate investors as speculators. I havn’t heard a single person cite proof that these drastic rules were warranted.
This move was nothing more than the government saying: “Hey, look at us. We’re acting responsibly. Oh, and by the way, we have no idea if these rules are in the country’s best interests.”
Anyone know of a lender that does 80% rental financing and allows another 10% VTB or 2nd?
@ Mike: when were all real estate investors labelled as speculators? I’m pretty sure that it was the only the people buying rental/flip condos with 5%-10% down that this referred to.
There are certainly flippers out there but they are not the majority. Most people who put down 5-10% are not buying to flip.
Peter knows his stuff but 20% down doesn’t work for everyone. 80% LTVs on rentals are a 2-sided sword. You cash flow better but ROI is way less. I am constantly seeing scenarios where 10% down makes more sense for the investor and there is no change in risk on the deal. The discussion should all be contingent on the borrower. I agree that 95% was a bad idea, but 80% is even worse – for the market, for investors, and for people who rent.
What other investments allow a retail investor less than 20% down?
Apart from stock options or trading forex I can’t think of any investments with higher leverage than our new 4-1 on rental properties.
If I’m missing some, please let me know.
“What other investments allow a retail investor less than 20% down?”
Somehow “risk” got redefined as “the condition of *not* letting people lever 20:1”.