Investment Properties (Rentals)

Buying a rental property can be an excellent way to grow your wealth. Whether you are looking for a steady monthly income, long-term equity growth, or a way to diversify your portfolio, real estate investment offers a tangible asset with the potential to deliver strong returns.

Apply Now Find a Mortgage Agent
investment-properties-img-1

Why Invest in Rental Properties?

Buying a property to rent out can be a great investment. 

  • It could appreciate in value over the years while giving you a steady monthly income while the rent collected reduces the mortgage balance. 
  • It can be used as a form of diversification, helping you spread risk across different asset classes. 
  • It could even act as a tangible asset that can keep you resilient during inflationary economic periods. 

Whatever your immediate investment goal, purchasing an income-generating property is often a key step in building long-term wealth and creating a smart investing portfolio.

Find a Mortgage Advisor
investment-properties-img-2

Understanding Rental Property Mortgages

Rental financing can be a little more challenging than your typical owner-occupied property. First, rental property mortgage requirements tend to be more stringent—you will need to put down at least 20%, and lenders will assess your entire file based on more conservative criteria. Several factors have an impact on qualification and available lenders. These include:

  • The number of units
  • Down payment amount
  • How many other properties you own 

Rental income can help offset debt servicing, but not all lenders will use 100% of it in their calculations.

Another point to consider is longer amortization periods for two main advantages: the interest paid on these mortgages is tax-deductible, and the lower monthly payment can reduce your monthly carrying costs.

Apply Now

Financing Options & Lender Types

Investment property mortgages can be more difficult to qualify for, meaning working with an experienced mortgage broker is often necessary to secure financing. At The Mortgage Advisors, we open doors beyond traditional banks and credit unions. While these standard options are great for established investors with strong credit, they may not be suitable for younger investors, first-time landlords, or those with non-traditional income sources.

In these situations, our brokers can connect you with alternative lenders who offer flexible solutions with more lenient qualification criteria. As such, Alternative and Private lenders should be considered in situations where conventional financing isn’t an option.

Using Home Equity for Investment Properties

If you already own a home, you may be able to refinance to buy a rental property by leveraging the equity in your current home. This can be done via a traditional mortgage refinance or by using a HELOC for investment property. While a mortgage refinance can provide a lump sum with a lower interest rate, a HELOC offers more flexibility for phased spending. With either option, when borrowing to invest, the interest may be tax-deductible, meaning that you could make your money work harder for you and improve your overall return on investment.

Cash Flow Considerations & Amortization Strategy

The immediate goal of purchasing a rental property is to increase monthly cash flow. This means that choosing a longer amortization period for your mortgage can reduce your monthly payments, allowing you to earn more from your rental income.

Before securing financing, it is important to evaluate:

  • Projected rental income
  • Operating costs
  • Possible periods of vacancy

While most investors aim to achieve a positive cash flow, some may accept a negative cash flow, choosing long-term property appreciation over immediate income. The key here is to align your financing strategy with your investment goals and risk tolerance

Apply Now
Miniature model house on a table with application papers, models of a mini family and tiles that spell out the word task. All together, they symbolize the Ontario Land Transfer Tax Rebate for First-Time Home Buyers

Tax Implications of Rental Property Ownership

Owning a rental property comes with certain tax obligations. While rental income is taxable, rental property tax deductions can help to offset the additional cost. As such, you can deduct expenses like mortgage interest, property taxes, home insurance, maintenance work, and utility costs (if paid by the landlord).

If you sell property at a profit, you may be required to pay capital gains tax on the appreciated value. Make sure to thoroughly review the tax obligations and tax benefits of rental property ownership before closing the deal.

How The Mortgage Advisors Can Help

The Mortgage Advisors can provide financing for up to 80% of the appraised value of your rental property, offering competitive rates with a range of terms and lenders. This is the ideal solution if you’re considering:

  • Converting your current home into a rental property
  • Creating a rental portfolio of one or more properties to generate cash flow and build equity
  • Purchasing a property for your child to live in

As experienced rental property mortgage brokers, we provide personalized guidance tailored to your financial profile and investment goals.  From connecting you with a wide lender network to providing support with rental income documentation, we are here to make the investment property mortgage process easier for you. 

Find a Mortgage Advisor

Ready to Purchase an Income Property? Let’s Talk

Contact Form

"*" indicates required fields

Contact Us