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Author Archives: Sandra Lastovic

Financing Existing Student Rentals: Challenges That Can Be Overcome

 

Financing existing student rentals: Challenges that can be overcome

An area of mortgage expertise I focus on is financing and refinancing rental properties. As a rental property owner myself, most clients appreciate the first-hand knowledge on the pros and cons of owning real estate as an investment.  I have made some great decisions with real estate and also some bad ones.

Student rentals are popular in Guelph since it’s a university town. But they’re becoming more challenging to get good mortgage financing on because of the perceived risk lenders have. As a Mortgage Broker, we have access to many sources of financing. I’m finding that most mortgage-lenders are not offering competitive mortgage financing on student rentals.

Here are some things that you need to be aware of when buying a student rental or refinancing it to access the equity for future investments:

In most cases the finance company will approve the mortgage based on the borrower qualifications. Where I’ve seen problems arise is through the appraisal of the property.  Lenders are now conditioning appraisals on almost all conventional mortgage loans.  Although you may have been pre-approved or approved for the mortgage loan, the student rental property will be an issue with most traditional mortgage lenders.  If you’re buying a new student rental be sure to have the appraisal completed before the financing condition is up.  This can save you a lot of last minute problems on the closing day.
For those mortgage lenders who will finance a student rental, you may be required to put up to 35% as a down payment versus 20% which is typical on a regular residential rental property.
If your son or daughter will be living in the property while they are going to school, these properties are viewed differently than a student rental property purely for investment purposes. Your mortgage professional should be able to give you advice on how to structure the mortgage loan to benefit you financially. Also seek the advice of an accountant to discuss the capital gains implications once you sell the property.

I’ve rented to students and I find most are respectful of the property and make good tenants.  As an investor, student rentals typically have good cash flow. The rent is traditionally charged per student per month and in Guelph the rent per month per student is about $500 to $700 per month.

When you buy a student rental ensure you work with a mortgage professional that has experience financing them and can take you through the process so that you get a mortgage approval, with a competitively priced mortgage.

If you’d like to discuss your own mortgage situation, I would welcome your call or e-mail!
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Sandra Lastovic
Senior Mortgage Agent

Banking Regulator sees potential risks; Current home values are stabilizing in most regions

    Banking regulator sees potential risks in high home prices, debt loads. The Office of the Superintendent of Financial Institutions (OSFI) is set to finalize changes to residential lending guidelines (B-20) by the end of this month. They are proposing changes that will see a ‘stress test’ applied to those borrowers buying a home… Read More

Economic Growth; The OECD has raised expectations for Canada. Should we expect interest rates to continue to rise?

The Organization for Economic Co-operation and Development has raised its expectations for economic growth in Canada this year compared with a June forecast. The Paris-based economic think tank says it now expects the Canadian economy to grow by 3.2 per cent this year, best in the G7. That is up from its forecast in June… Read More

CMP Women of Influence 2017

For decades, the mortgage industry, like many other business sectors, has long been dominated by men. In 2017, that’s no longer the case. The 50 women on this list prove that mortgage brokering is no longer just a man’s game. Following an overwhelming response from lenders and brokers across all provinces, CMP culled this year’s… Read More

Changes to Canada’s Housing Rules

Over the last few days, I’ve fielded calls from concerned clients who are buying a house and want to know the impact of the recent regulatory changes to Canada’s Housing Rules that come in to effect in late October. I’m sharing a statement provided to me yesterday from our industry lobby group Mortgage Professionals Canada. Also,… Read More

What can we expect in the housing market for the rest of 2016?

Is Guelph and surrounding area in a housing bubble? The general definition we use to describe a housing bubble is two to three consecutive years of unsustainable price appreciation. Unsustainable price growth would include a 10% or more price increase year-over-year. According to The Guelph and District Realtor’s Association (GDAR) as of September 9, 2016… Read More

Getting separated is never easy: learn how to move ahead with your living arrangements

Aside from the emotions involved with a separation, there are several things to consider and act upon relative to your current mortgage. The first important step is to finalize the separation and get an agreement together. This important document outlines how your assets will be divided and how other important financial decisions will made. There… Read More

OSFI Tightens Supervisory Expectations for Mortgage Underwriting

OTTAWA ─ July 7, 2016 ─ Office of the Superintendent of Financial Institutions The Office of the Superintendent of Financial Institutions Canada (OSFI) today released a letter to all federally regulated financial institutions (FRFIs) reinforcing its expectation that federally regulated financial institutions engage in prudent underwriting of residential mortgage loans. With Canadian household debt levels… Read More

Should I buy a house now or wait until I have more money saved?

Canada Mortgage Housing Corporation (CMHC) has some interesting statistics available on home purchases. It normally takes people nine to fourteen months to decide to move. However, once someone has made the decision, they normally act promptly when they see a house they’d like to buy. For the first time in 2015 more first time home… Read More