4 Rentals + One more

[countryproperty]

Does anyone know what the lenders would look at if I wanted to buy a primary residence. I have 4 rental properties/8 doors with 4 mortgages (my family is in one of the units). I know I would need 5% down how would they treat the rental income? Can anyone recommend a lender, I'm in NB?



Thanks

Mark

 

[RobMacdonald]

You can still qualify under the residential guidelines, but many lenders have a limit of 4 properties.



The problem you may have is how the rental income is treated. The insurers will require your to use only 50% of the gross rent, added to your peronsal income. Then you must include the PIT in the payments section. So you will need a significant surplus income to qualify.



Alternatively, if you've owned the properties for 2 + years, it's possible to use the net surplus or deficit on your tax return to qualify.



As far as a lender, I don't know the NB market options, but a good mortgage broker would be able to work out some options for you.

 

[countryproperty]

So to get around the 50% rental add in I must own my properties for 2 years, then they will look at my tax return? I started renting my primary residence in 2008 and bought my 4th property in Nov 2009 so I have 2009 and 2010 tax returns that show rental income.



Of course the other challenge is I have written off considerable expenses against my rental income so I show a lost. Will mortgage brokers take that with a grain of salt. For example I put $10,000 in to a rental claim it against my income but I pay it back monthly through a line of credit which allows me to have a positive cash flow just not on paper.



Should I be using a different tax reduction strategy that won't have a negative impact on my borrowing power?



Thanks for your advice

Mark