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22 Jan

Most common roadblocks for investment property mortgages, part 4


Posted by: Aneta Zimnicki

In my previous blog, I discussed part one of the most common roadblocks for investment property mortgages.  In no particular order, the following is the last of my series of the 16 most common roadblocks for investment property mortgages.   The list is based on current lenders’ policies (in general, ‘A lenders‘), and, of course, like all policies, they are always subject to change.  Hopefully we will see in the future some changes in the policies in favour of the real estate investor.  This list is more applicable to individuals who don’t have hundreds of properties and who are applying for residential mortgages (5plex or less).

13. You are doing a private sale – some lenders don’t accept, it smells too fraudulent. If they do accept, the more professional and legitimate everything looks, the better. You will probably have to do an appraisal.

14. You are ‘business for self’, can’t qualify your income via the typical ways (paystub, job letter, Notice of Assessment, tax returns and schedules) and are applying for investment property mortgage – a bad combination with some lenders.  Some lenders have stated ‘no professional real estate investors’ (meaning they want to see income from elsewhere), I wonder though, would they rather have ‘amateur real estate investors’ that don’t know what their doing and hence are unable to replicate their results and acquire more properties?

15. You are a corporation applying for an investment property mortgage. This limits your lender choices and your corporation documents need to be in order. Not impossible to get a mortgage, just realize you are potentially narrowing your scope.  Also, most likely, if applying with a corporation, you still need to personally guarantee the loan – no free ride!

16. You are buying a serious fixer upper. Promising the lender that it will be worth way more when you are done with it is usually does not seal the deal.  Lenders see the property as collateral and don’t want to be stuck with an unmarketable property.  Renovation projects are risky and expensive, there is much that can go wrong, in the lender’s eyes.  These types of projects are best reserved for private lenders.

A mortgage broker specializing in investment mortgage is familiar with these (ever-changing)  policies and can help you navigate through these roadblocks with proper mortgage planning.  Trying to figure all this out yourself can be overwhelming, instead use the time and energy to work on being the superstar real estate investor, finding and evaluating properties and attracting joint venture partners.