“Wow! What the heck do you mean by that, Dan?” I get asked all the time…
“Should I be using a lot of the smaller banks for investment mortgages first?“
Of course my answer is.. it depends.
Given today’s economy and ever changing mortgage rules our strategies change and seem to adapt to the market place. I can tell you that the strategy involved to get a sophisticated investor more than 10 mortgages is very different than it was even a year ago.
From my experience for folks with good income and credit, it just doesn’t make sense to pay insurance premiums on top of your mortgage. Even if these are amortized over 25 years it still takes a bite into your overall ROI. In the day to day business operations I am noticing that I can still get a person 4 to 8 regular mortgage at 80% loan to value and 30 year amortizations. All of these will be with one of Canada’s large national banks.
What’s next, you say? Well it’s off to the tier 2 banks we go. Last week I had a large western Canadian financial institution come to my office and say that they would like to lend some money to my large investors. I said great tell me what you have and what are the parameters. I do like that they are willing to go to the smaller centers as well.
The catch so to speak is that in the tier 2 banks we see a limit on loan to value such as 75% on a purchase and 70% on a refinance. The rates are slightly higher at 4.75% to 4.99% with only a 1% fee. This is actually not bad when you look at what CMHC charges for insurance on rental mortgages.
So I have 4 mortgages companies that will lend you up to 4 of these types of mortgages per person. 16 additional mortgage above the tier one banks giving you the regular 8 that we talked about above. With the right broker and the right plan it is still possible to build a large portfolio these days.
I actually have one credit union that told me they have no written limit for the number of mortgages given for my investor clients. *smile
All the best and contact me anytime with your questions!