Refinancing a rental property

[fishdog]

Hello all,






I was hoping I could get some guidance from the forum. It was my understanding that you could refinance a rental property up to 80% LTV without CMHC insurance. However when I meet with my mortgage broker today he said that all of his lenders are now only going up to 75%LTV without CMHC. We could still go up to 80% but it would require CMHC at a 2.5% premium.







Sorry if this is common knowledge. It was just news to me. Is this the case now? Do you know of any lenders that still do 80% without CMHC? He said his last lender just made the change a few weeks ago.







Thanks so much!

 

[Sherilynn]

Short answer: get a new mortgage broker. (Some brokers are only effective at working with owner-occupiers.)



Long answer: it depends. If you have quite a few rental properties and they are not cashflowing at least 1.2 times your expenses, then the banks that still offer 20% down on rentals may not want to touch it. Also, refinancing is different than getting a mortgage on a new purchase. So in either case, you may be stuck with 25% equity.



Further to the refinance, perhaps a mortgage broker in this forum could shed more light on the subject. Perhaps there are new rules or guidelines that inhibit 20% down on a refi.

 

[RobMacdonald]

There are only a few lenders left that will allow up to 80% financing on a rental property. And that depends on the type of property and what province you are in.



Many of the mono line mortgage lenders will allow 80% financing, but it is correct they will require CMHC insurance. I'm assuming the portfolio has 4 properties or less, as that is the other requirment by most mono line lenders.



Qualifying for 80% financing is more difficult than it used to be, but it is possible.