Dumb question - commercial property mortgage insurance

[surfermoe]

Sorry in advance for the newbie question.

My wife and I had our conditional offer accepted on a triplex that is zoned mixed-use. The seller is willing to do a VTB for 15%, and we`ll put down the remaining 10% needed for the down payment.

Will be have to buy mortgage insurance? (I know that insurance isn`t required for residential property at LTV < 80%, but am not sure about mixed-use or commercial.)

Thanks!

 

[Thomas Beyer]

QUOTE (surfermoe @ Feb 17 2010, 09:55 AM) ..

Will be have to buy mortgage insurance?
no, as you are below 80%.

Will you be able to get a 75% mortgage as stated ?

 

[RobMacdonald]

Not every bank will allow a VTB, so you may need to shop around a bit. Generally, as long as you have 10% of your own funds into the deal, you should be able to get financing.

And Thomas is correct, no CMHC premium will apply.

 

[surfermoe]

Great! Thanks Thomas and Rob.

Our mortgage broker has indicated that we`ll be able to get the financing. If there`s any peculiar to mixed-use mortgages that I should be aware of, would appreciate any advice.

 

[Nir]

QUOTE (RobMacdonald @ Feb 17 2010, 11:28 AM) Generally, as long as you have 10% of your own funds into the deal, you should be able to get financing.

And Thomas is correct, no CMHC premium will apply.


so with a 15% VTB, will putting only 10% of your own fund still be sufficient even with Flaherty`s new 20% down payment rule?
is the answer the same whether question is on 4-plex or 10-plex? THANKS.

(assuming no loan to value issue/appraised value issue. In other words, the question is just about Flaherty`s new rule)

 

[rickm]

QUOTE (surfermoe @ Feb 17 2010, 09:55 AM) Sorry in advance for the newbie question.

My wife and I had our conditional offer accepted on a triplex that is zoned mixed-use. The seller is willing to do a VTB for 15%, and we`ll put down the remaining 10% needed for the down payment.

Will be have to buy mortgage insurance? (I know that insurance isn`t required for residential property at LTV < 80%, but am not sure about mixed-use or commercial.)

Thanks!

Hey surfermoe dude,

There is never a dumb question when it relates to real estate. Don`t make any apologies for asking so called newbie questions. You at least are asking questions. Better to let the REINation correct you than have unhappy JV`s down the road (or worse, unhappy wife down the road).

If I had asked a few more dumb questions when I started out, I would`ve saved myself some coin. Ouch.

 

[GarthChapman]

Last time I checked only MacQuarie and M-CAP were allowing VTB`s on rental property purchases. Very rare these days.

Hope that helps,

 

[Nir]

Thanks Garth. I think about a third of the apartment buildings are sold with a VTB option. that`s a huge number so even if it`s just MacQuarie and M-CAP they must be Big. However, the question is will Flaherty new rule not allow MacQuarie and M-CAP to continue allowing 10% down with VTB?

In other words can you still put 10% of your own fund if a VTB is offered?
does new rule affect apartment buildings or just residentials up to 4 units?

Thanks.

 

[RCrein]

QUOTE (surfermoe @ Feb 17 2010, 11:55 AM) Sorry in advance for the newbie question.

My wife and I had our conditional offer accepted on a triplex that is zoned mixed-use. The seller is willing to do a VTB for 15%, and we`ll put down the remaining 10% needed for the down payment.

Will be have to buy mortgage insurance? (I know that insurance isn`t required for residential property at LTV < 80%, but am not sure about mixed-use or commercial.)

Thanks!


If the property is residential you should be able to get a residential mortgage for a building with up to four units. The mixed use zoning allows for many uses including commercial but if the building is a small residential property your bank should be able to handle things with a residental mortgage unless you already have several properties. The advantage of residential financing are lower costs, interest rates and speed/ease of process. Good luck with your investment.

 

[GarthChapman]

QUOTE (investmart @ Feb 18 2010, 07:30 AM) Thanks Garth. I think about a third of the apartment buildings are sold with a VTB option. that`s a huge number so even if it`s just MacQuarie and M-CAP they must be Big. However, the question is will Flaherty new rule not allow MacQuarie and M-CAP to continue allowing 10% down with VTB?

In other words can you still put 10% of your own fund if a VTB is offered?
does new rule affect apartment buildings or just residentials up to 4 units?

Thanks.

Sorry for any confusion. As the original question was referring to a triplex my answer was in reference to residential lending (under 5 units). On the commerical lending side (over 4 units) VTB`s are well accepted by most lenders. The new rules only apply to residential lending, so carry on what you are doing.

Hope that clarifies.

 

[Pheenix]

Hi
You have a lot of good discussion and guidance about a number of points, and particularly the important ones.

Just to add some clarity on one aspect regarding zoning. It covers what can be put there. In most urban areas they have zonings allowing a range of uses. You also get situations where the zoning changes after something is done on the property, so this use is allowed to continue.

Usually the underlying zoning for a developed property doesn`t effect financing per se. It can effect its market value though, but that is a different discussion.

Hope that helps from another perspective.

Brad