If you’ve already settled in and gotten the hang of life with a mortgage on your primary residence — or closed it altogether — then chances are you’re thinking of looking into investment properties. Whether you want to kickstart a full-time commitment to real estate or look into a rental unit on the side, you will need financing. Wondering how to finance real estate without investment properties without breaking the bank? There are many real estate investment loan options available for you in the market. Let’s take a look at all of your options — which are more than you may be anticipating.
What are Mortgages for Real Estate Investors?
Before we determine how I, Jodi Habel, can assist you in securing the real estate that you have your eye set on, it’s crucial to understand what mortgage options real estate investors have. Setting up a real estate portfolio requires significant investment that often surpasses the costs of an individual residential home or commercial property. It may consider handling several properties at one time, including their corresponding financing. Often, you may be faced with getting a second mortgage for an investment property. Luckily, there are available lending options specifically for these cases. Your options range from conventional and FHA mortgages to hard money loans and HELOC (Home Equity Line of Credit).
How Mortgages for Real Estate Investors Works
Requirements and criteria vary for real estate investors and those seeking investment properties as opposed to those who will take residence in the very property they get an approved mortgage for. Generally, be prepared to face higher down payment requirements and interest rates overall if you are considering real estate financing. That is due to the fact that lenders consider investment properties as a greater risk than residential ones because the borrower typically does not live on the property and there is no guarantee that the property will generate the required regular financing to pay monthly mortgage payment installments.
With all of that in mind, here is a brief breakdown of some notable options for real estate financing:
Conventional mortgage — An optimal option for individuals with a good credit score since there is a great chance to secure a better rate. Requires higher down payments at around 20%.
Government/federal-backed mortgage — This is a recommended option for financing a multiple-unit property if you will reside in one of the units. Since this type of loan requires you to live on the property, it is typically not the first choice for investors. However, it comes with the advantage of securing a significantly low down payment. This is a great options if you are considering purchasing a duplex and will be residing in one unit and renting the other one out.
Hard money loan — This type of loan is considered less but it’s an entirely available option for those who want quick access to financing an investment property. A hard money loan is mostly considered by investors who aim to quickly renovate a property and rent it out to have a faster return on investment and pay back the loan.
HELOC — A home equity loan can be just the type of financing for you if you have home equity in a property you currently reside in. It’s a common way to secure significant financing for an investment property at an interest rate of Prime plus 0.50%.
Best Mortgage Lenders For Investment Properties
Every lender comes with its benefits and advantages when it comes to finding financing for a company. It all depends on your personal preferences and eligibility criteria. Some investors even opt for a private loan from their family members to finance their real estate endeavors. Generally, working with a mortgage broker can help you tap into better rates than directly applying to a bank or credit union. Assess all of your options before settling with a final choice. The ideal mortgage offer is out there — and it’s not out of hand’s reach.
Don’t wonder how to borrow money for real estate investment any longer. Please contact me, Jodi Habel, for help to acquire financing. I provide complete mortgage services in Canada smoother than you can imagine. After all, it may be your first time getting a mortgage, but I have acquired relationships with major banks, credit unions, monoline, and alternative lenders through my 15 years of experience working in the industry.