3 types of mortgage products when purchasing an investment property Toronto
I got a question on Facebook from one of my friends about different types of mortgages that are available if purchasing an investment property in Toronto such as a duplex, triplex, a store with residential units upstairs, commercial plaza or an apartment building.
On the macro view, there are three types of products that you would be looking at:
A primary residence for a first time buyer or repeat buyer with 4 or less units
You can purchase this property with as low as 5% down and as long as it's under 1 million dollar, it's insured by CMHC. This option offers great return even when properties are being offered at a low cap rate as your cash on cash return is very good.
An investment property with 4 or less units
You would require at least 20% down. This is applicable when you already own a home and are purchasing a second property. Cash flow calculations are very important as you want to make sure they property can carry it self and is not going to cost you more than having your own place.
An investment property with a commercial unit or an apartment building with 5 or more units
Here you would require 25% down at least and you have the option of registering the property under a holding company as well. You can register any property under a holding company but usually lenders would want to have more down payment hence it makes the most sense in this category. You should consult with a tax accountant to see what your implications would be if you plan to register under a holding corporation.
All the above options are subject to lender criteria and require a personal guarantee from the purchaser even when purchasing under a corporation. Consult with a professional mortgage broker to get more information about the different products available or contact me for a referral.
If you have any questions, please feel free to contact me directly.
Addy Saeed
Real Estate Sales Representative
Re/max Active Realty Inc., Brokerage
Direct: 1-877-439-2339
or email as per the video
Intended to solicit buyers and sellers but not those currently under contract
Each office independently owned and operated
I got a question on Facebook from one of my friends about different types of mortgages that are available if purchasing an investment property in Toronto such as a duplex, triplex, a store with residential units upstairs, commercial plaza or an apartment building.
On the macro view, there are three types of products that you would be looking at:
A primary residence for a first time buyer or repeat buyer with 4 or less units
You can purchase this property with as low as 5% down and as long as it’s under 1 million dollar, it’s insured by CMHC. This option offers great return even when properties are being offered at a low cap rate as your cash on cash return is very good.
An investment property with 4 or less units
You would require at least 20% down. This is applicable when you already own a home and are purchasing a second property. Cash flow calculations are very important as you want to make sure they property can carry it self and is not going to cost you more than having your own place.
An investment property with a commercial unit or an apartment building with 5 or more units
Here you would require 25% down at least and you have the option of registering the property under a holding company as well. You can register any property under a holding company but usually lenders would want to have more down payment hence it makes the most sense in this category. You should consult with a tax accountant to see what your implications would be if you plan to register under a holding corporation.
All the above options are subject to lender criteria and require a personal guarantee from the purchaser even when purchasing under a corporation. Consult with a professional mortgage broker to get more information about the different products available or contact me for a referral.
If you have any questions, please feel free to contact me directly.
Addy Saeed
Real Estate Sales Representative
Re/max Active Realty Inc., Brokerage
Direct: 1-877-439-2339
or email as per the video
Intended to solicit buyers and sellers but not those currently under contract
Each office independently owned and operated
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