Investment property mortgage rates
Qualification criteria
So long as you meet the qualification criteria and can make at least the minimum down payment on your investment property, you should qualify for the same mortgage rates and terms as those offered on principal residence mortgages – these include fixed, variable and adjustable rate mortgages.
It’s important to note, however, that some smaller lenders don’t offer investment property mortgages at all – or, if they do, they add a small premium to the rate, such as +0.30%. But all of Canada’s Big Banks will offer rates and terms similar to what is available for any residential mortgage.
Bank vs. mortgage broker
To qualify for an investment property mortgage, you will need to provide your lender with:
- the Agreement of Purchase and Sale
- proof of a sizeable down payment
- proof of steady income, usually in the form of a job letter and pay stubs or Notice of Assessment for two years of T1 Generals (self-employed)
- proof of existing renters, if there are any
- zoning documentation to prove you are purchasing a residential property and not a commercial property
Your lender will also need to run a credit check and calculate your debt coverage ratio.
Similar to when you took out the mortgage on your principal residence, you can choose to have either a bank* or a mortgage broker help you get pre-approved and then approved for investment property financing. With investment property mortgages, it could be even more important to consider working with a mortgage broker because of their experience with other investors and familiarity with the special financing conditions required by individual lenders.
The other benefits of working with a mortgage broker are obvious: they only need to pull your credit report once, they shop around for you and they look for a product and rate that will match your financial situation. The best part is that you don't have to pay them for their services - instead, the lender you end up getting financing from pays the mortgage broker a fee.
*It's also important to note that a number of financial institutions don’t offer investment property mortgage products.