More Canadians to become landlords

With a new CHMC (Canada House and Mortgage Corporation) mortgage-insurance product, more Canadians could buy rental properites with no downpayment.

For a premium based on the loan amount, CHMC now insures mortgages so investors can buy up to four units of rental housing with little money down.

The Crown corporation allows now for 100-per-cent financing on one to two units and 90-per-cent financing on the third and fourth ones.

Until last month, CMHC required a down payment of 15 per cent on investment properties.

The new product, introduced last month, also changes the way financial institutions calculate the ratios used to qualify borrowers for mortgages, which makes it easier to buy rental properties.

The insurance premium is 7.25 per cent of the mortgage amount for 100 per cent financing.

This product will look appealing to people who are self-employed or don’t have a pension plan.

The rent will pay down the mortgage and when ready to retire, it would generate a revenue.

Leave a Reply