Mortgages for investment properties let buyers buy homes to either flip and sell them for a profit or rent them out to generate extra income. Rental properties, mobile homes, apartments, condos, and family houses are among the assets that can be purchased using these mortgages.
Investment property mortgage in Calgary involves stricter requirements, such as a larger down payment and higher interest rates. Higher down payments do, however, offer some advantages to purchasers. Generally speaking, a larger down payment lowers both the interest rate and the loan principal.
The loan rates for investment property mortgages are greater than those on regular house mortgages. A minimum down payment of 15-20% is needed to be eligible for financing on a single-family home through investment property. If your credit is good, you may be able to qualify for a smaller down payment, depending on the lender’s policies and discretion. A 25–30% down payment is what you should be ready for when applying for a loan for multifamily investment property.
Advantages of Investment Property Mortgages
- Outstanding Return on Investment
Investing in real estate can be a somewhat safe choice, in contrast to the very speculative and risky investment options that are now offered in the market. You can achieve a fantastic return on investment capital if you have your finances in order and are eligible for mortgages secured by investment properties.
You will have profits after your monthly mortgage payment, which will give you a comfortable income. You will eventually pay back your loan, become the owner of your property, and generate a sizable income stream from your investment property with a timely repayment schedule.
- Equity in Property
You can use the equity you’ve built up via payments to sell your house at any moment and make a sizable profit. The borrower’s monthly mortgage payments go toward reducing the amount of principal owed. As a result, you can eventually pay off the entire house and acquire more equity each month.
Disadvantage of Investment Property Mortgages
- Property Devaluation
Throughout the course of repaying your mortgage, you will have to deal with the issue of property depreciation. If you intend to flip the property, there’s always a chance that, before you can sale it, different demographic or geographic variables will cause the property’s value to drop. However, given the current housing market’s tendency toward expansion over time, there are frequently good odds of turning a profit. Property devaluation is less of an issue if it is rented out.
Conclusion
There are a lot of options available to you when you go into the market to look for a mortgage for an investment property. It is recommended to conduct thorough research that considers your unique financial condition, available mortgage programs, and payback schedules. To assist you with the procedure, you can always get in touch with a qualified specialist. Mortgages secured by investment properties are a wise choice for people looking to accumulate a strong investment portfolio for the future.
If you are looking for a reliable mortgage broker to help you out with investment property loan in Calgary, rely on none other than Sandhu & Sran Mortgages.