8 Things You Need to Know to Gain 100% Rental Income

CMCH is Canada’s largest insurer of mortgages, and recently they have taken on more risk in order to boost the stock of affordable rentals in Canada. They have just changed their rules to allow 100% of the income you make from your rental unit. Under the current rules, they are only allowed to include 50% of your rental income. Although they announced it this week, it will not take effect until September 28, giving us lots of time to plan ahead. Looking forward, this will be a big benefit for people that are looking to purchase a home and subsidize some of the costs by renting out.

Remember, we have not seen it in effect yet, and each bank may follow the rules with subtle differences so we need to keep monitoring change as it happens. Here are 8 requirements that need to be met before considering this as an option:

  1. Owner-Occupied Property
      • The property must be owner-occupied. The person on title to the property must reside there.

     

  2. Only Two Units Allowed
      • The property being insured can only have two units. (One the owner will occupy and the other will be rented out in a LEGAL SUITE)

     

  3. A Legal Second Unit
      • The second unit must be legal. This means any illegal rental units can’t use the income to qualify for the mortgage.

     

  4. Self-Contained Suite
      • The suite must be self-contained with its own entrance, bathroom and kitchen.

     

  5. Two Year Rental History
      • For existing units, there must be a two-year history of rental income.

     

  6. Market Rent Appraisals
      • For new units, a ‘market rent appraisal’ will be requested to compare your new unit to ones currently on the market.

     

  7. Heating Costs and Property Taxes
      • We also now have to include the heating costs and property taxes for the rental unit on the mortgage application, something we didn’t have to do before.

     

  8. Managing Credit
      • You must have a ‘Strong Ability to Manage Credit’ – simply, you must have a good credit score.

     

In our area, I believe that this rule change will invoke an even hotter housing market. Affordable housing is a necessity in Hamilton and there are many opportunities for this rule change to help potential buyers. Consider, we don’t know if the banks will require fire outfitting in the rental unit to include the 100% income. Zoning and other obstacles may get in the way, together we will overcome them.

Before you go out looking, come speak to me, there are some requirements I would like to go over with you before you make an offer.








×

×

222014_Winner_Badge-2

×

×









×








×









×
Contact Jason

 

×