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Interest rates for Rentals

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Fortuneinvesting

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I know the CMHC loan insurance premiums are 6.90% but when I apply for a mortgage what are the typical rates I should expect. I`m assuming the 3.69% offered at the moment is not going to go for rentals?

What has everyone else`s experience been?

Thanks
 
QUOTE (Fortuneinvesting @ Apr 19 2009, 03:04 PM) I know the CMHC loan insurance premiums are 6.90% but when I apply for a mortgage what are the typical rates I should expect. I`m assuming the 3.69% offered at the moment is not going to go for rentals?

What has everyone else`s experience been?

Thanks
Mortgage interest rates are around 4% for 5 year fixed .. or prime +0.6 to P+0.8% for variable. Lower for multi-family, as we just locked in at 3.5% for 5 years for a property in Abbotsford, BC.

A CMHC insured assumes a fixed rate.

The premium is added as a fee UPFRONT or onto the mortgage, and varies by loan-to-value (LTV).

Banks can lend up to 80% LTV under the Canadian Bank Act. If over 80% LTV a mortgage has to be insured. There are several, such as Genworth, besides CMHC which is a federal crown corporation.
 
QUOTE (thomasbeyer2000 @ Apr 19 2009, 06:21 PM) Mortgage interest rates are around 4% for 5 year fixed .. or prime +0.6 to P+0.8% for variable. Lower for multi-family, as we just locked in at 3.5% for 5 years for a property in Abbotsford, BC.

A CMHC insured assumes a fixed rate.

The premium is added as a fee UPFRONT or onto the mortgage, and varies by loan-to-value (LTV).

Banks can lend up to 80% LTV under the Canadian Bank Act. If over 80% LTV a mortgage has to be insured. There are several, such as Genworth, besides CMHC which is a federal crown corporation.

Thanks for the post, are you saying the rates should be the same for a personal property house as opposed to a rental house. (just single family rental).
 
I just went through CMHC`s rental property program and put 5% down which meant having to go with a fixed rate of 4.05% (BMO, 5yr term). If I had put 10% down, I could have gone into a variable at 3.1% with BMO.

Something else I just learned - you can only use this really great CMHC rental program twice. Thankfully there are others like Genworth and AIG.

Lee



QUOTE (Fortuneinvesting @ Apr 19 2009, 02:04 PM) I know the CMHC loan insurance premiums are 6.90% but when I apply for a mortgage what are the typical rates I should expect. I`m assuming the 3.69% offered at the moment is not going to go for rentals?

What has everyone else`s experience been?

Thanks
 
QUOTE (jlee @ Apr 19 2009, 09:32 PM) I just went through CMHC`s rental property program and put 5% down which meant having to go with a fixed rate of 4.05% (BMO, 5yr term). If I had put 10% down, I could have gone into a variable at 3.1% with BMO.

Something else I just learned - you can only use this really great CMHC rental program twice. Thankfully there are others like Genworth and AIG.

Lee

Thanks Lee for the experienced advice! Was there any negotiating with BMO on the 4.05%, what would it have been if you purchased for personal use? Why do you call the CMHC rental program "really great" is there 6.90% premium (35 yrs, 5% down) better priced than others?

Thank you, this forum is great.
 
QUOTE (jlee @ Apr 19 2009, 09:32 PM) Something else I just learned - you can only use this really great CMHC rental program twice. Thankfully there are others like Genworth and AIG.

Lee

Genworth isn`t insuring high ratio mortgages for rental properties as April 18th. Hopefully CMHC doesn`t decide to follow suit.
 
QUOTE (Fortuneinvesting @ Apr 19 2009, 10:00 PM) Thanks Lee for the experienced advice! Was there any negotiating with BMO on the 4.05%, what would it have been if you purchased for personal use? Why do you call the CMHC rental program "really great" is there 6.90% premium (35 yrs, 5% down) better priced than others?

Thank you, this forum is great.
high LTV = high risk .. hence high premium !!

interest rate is the same for rentals or personal use if CMHC and if high credit score .. different if low score or non-CMHC sub-80% LTV !
 
QUOTE (thomasbeyer2000 @ Apr 19 2009, 10:05 PM) high LTV = high risk .. hence high premium !!
My comment sounded as though I was shocked by the 6.90%, I`m well aware that more risks yields higher return rates and the same goes for interest rates.

QUOTE (thomasbeyer2000 @ Apr 19 2009, 10:05 PM) interest rate is the same for rentals or personal use if CMHC and if high credit score .. different if low score or non-CMHC sub-80% LTV !
So theoretically, I should be able to get close to the 3.69% interest rate banks are giving. My goal is 3.99%.
 
QUOTE (Fortuneinvesting @ Apr 19 2009, 10:12 PM) My comment sounded as though I was shocked by the 6.90%, I`m well aware that more risks yields higher return rates and the same goes for interest rates.


So theoretically, I should be able to get close to the 3.69% interest rate banks are giving. My goal is 3.99%.
4% more or less is the best fixed rate these days for 5 years .. or prime + 0.6% or so .. take anything fixed sub 4.25% for 5 years as 5 year rates will go up !
 
QUOTE (thomasbeyer2000 @ Apr 19 2009, 10:23 PM) 4% more or less is the best fixed rate these days for 5 years .. or prime + 0.6% or so .. take anything fixed sub 4.25% for 5 years as 5 year rates will go up !

Thanks for the great help! I`ll take the word of Lee that I won`t be able to do variable without a 10% down payment. But 4% is still very good 5 year money.

Up early tomorrow so off to bed now. Cheers
 
Well, any program that allows me to put only 5% or 10% down on a rental property is great. At some point, we all hit a wall with down-payment money. The premium is included in the mortgage so my out-of-pocket expenses are really very little. Of course, it still has to cash-flow with 5% down and mine do.

There was no negotiating as my regular mortgage gal at BMO usually gives me their best rate. I don`t know what it might have been for personal use, but I believe it would have been the same.

As far as I know, CMHC is the only rental program that allows buyers to put 5% down. Please let me know if you hear of anything else.

Lee


QUOTE (Fortuneinvesting @ Apr 19 2009, 09:00 PM) Thanks Lee for the experienced advice! Was there any negotiating with BMO on the 4.05%, what would it have been if you purchased for personal use? Why do you call the CMHC rental program "really great" is there 6.90% premium (35 yrs, 5% down) better priced than others?

Thank you, this forum is great.
 
You can always call CMHC directly with your questions. Or if you email me at Thanks for the great help! I`ll take the word of Lee that I won`t be able to do variable without a 10% down payment. But 4% is still very good 5 year money.

Up early tomorrow so off to bed now. Cheers
 
That`s terrible news indeed!! Oh well, this will push me to finally do a JV! Thanks for the update.

QUOTE (mortgageman @ Apr 19 2009, 09:02 PM) Genworth isn`t insuring high ratio mortgages for rental properties as April 18th. Hopefully CMHC doesn`t decide to follow suit.
 
QUOTE (jlee @ Apr 19 2009, 11:51 PM) You can always call CMHC directly with your questions. Or if you email me at [email protected] I can send you the CMHC income property program info sheet. It`s very, very hard to find on their site.

Lee

I have both PDF sheets from CMHC, and I can`t even find where I got them. But I have them printed in my binder so I will treat them like gold haha.
If you have the link handy maybe you could post for everyone else. Thanks Lee
 
QUOTE (jlee @ Apr 19 2009, 11:48 PM) Well, any program that allows me to put only 5% or 10% down on a rental property is great. .. Of course, it still has to cash-flow with 5% down and mine do.
do they ? what is the purchase price ? what is the rent assumption ? what vacancies ? using what expenses ?

QUOTE (jlee @ Apr 19 2009, 11:48 PM) ...There was no negotiating as my regular mortgage gal at BMO usually gives me their best rate. ...
go shopping for money at a mortgage broker ..
 
QUOTE (Fortuneinvesting @ Apr 19 2009, 02:04 PM) I know the CMHC loan insurance premiums are 6.90% but when I apply for a mortgage what are the typical rates I should expect. I`m assuming the 3.69% offered at the moment is not going to go for rentals?

What has everyone else`s experience been?

Thanks


If you can qualify under CMHC`s guidelines (which you would have to in order to get the insurance), the rates are the same for owner occupied and rentals. Many lenders also offer VRM`s at 95%, so if you want a VRM, you needn`t put down 10%........
 
I don`t have the link, just the pdf. I haven`t a clue where I found it on their site. If anyone wants it, please email me at [email protected].


QUOTE (Fortuneinvesting @ Apr 20 2009, 07:28 AM) I have both PDF sheets from CMHC, and I can`t even find where I got them. But I have them printed in my binder so I will treat them like gold haha.
If you have the link handy maybe you could post for everyone else. Thanks Lee
 
QUOTE (thomasbeyer2000 @ Apr 20 2009, 09:54 AM) do they ? what is the purchase price ? what is the rent assumption ? what vacancies ? using what expenses ?


go shopping for money at a mortgage broker ..

416 sq ft, 1 bedroom ground floor condo with 390 sq ft yard

Purchase Price: $67,500
Already tenanted and the rent is $570 (nearing rent increase date)
Mortgage: $304/month
Strata fees: $101/month
Taxes: $30/month
 
Just got word that a fellow investor got a 3.99% interest rate on a 5 year rental mortgage with 5% down. So my guess of 3.99% is valid.
 
QUOTE (jlee @ Apr 21 2009, 09:51 AM) I don`t have the link, just the pdf. I haven`t a clue where I found it on their site. If anyone wants it, please email me at [email protected].

Found it! There`s more, but these are the "main three" in my opinion.
CMHC Purchase
http://www.cmhc-schl.gc.ca/en/hoficlincl/m...se-03-27-09.pdf

CMHC Income Property (non-owner occupied)
http://www.cmhc-schl.gc.ca/en/hoficlincl/m...ty-03-27-09.pdf

Multi-Unit Reference Guide
http://www.cmhc-schl.gc.ca/en/hoficlincl/m...-2009_63885.pdf

Source:
http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/
 
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