I recently had a conversation with a great friend and top Re/Max Realtor in Toronto Ashley Fray. We were catching up and discussing current market trends and how the new mortgage rules have affected things. It appears, they have had a dramatic impact quiet fast, especially on the un informed investors. Here is why, but there is another solution so read on.
Since investors now need 20% down payment for rental properties most have only put down 5-10% on pre construction. It appears a lot of people are in this position and having to assign units at below purchase prices. This is causing some new un lived in suites to be up for sale, so sellers are scrambling for buyers or risk losing all of their down payments. This fortunately can be avoided. Do not be one of those sellers, get informed.
Another reason is that since amortization periods have been cut by 5 years. Now the monthly cost to maintain is higher and it is more difficult to have a cash positive property in Toronto. Costs have gone up by 150-250 per month, as opposed to what the buyers were originally anticipating. Paying money out-of-pocket is not something most want out of their rental properties.
The new mortgage rules only affect CMHC insured loans and mortgages. Your mortgage professional still has access to equity and alternate A lenders. Also, we have access to Genworth Financial who is another insurer of Canadian Mortgages. Sometimes getting a loan at a little higher rate for one year so you can properly market your property is better than losing money on a rushed sale.
Companies all over still over 35 year amortization rates. Lenders like HomeTrust and Equitable Trust have great products. Other lenders are available as well, making the variety of choices and options for clients numerous. Being well-informed of what your needs are is crucial to making a sound and informed decision. Working with a professional agent who has proper contacts and referrals is key. They can guide you through unforeseen situations and minimize your loses. With finances and real estate always get a second opinion as you would do with a medical or law professional. Learn from your mistakes and always have a plan B.
To find out how you can get a rental property loan or to discuss your situation please contact me at firstname.lastname@example.org.