Hi.. I have a concern regarding mortgage. I have a good credit score and my financial service provider is happy to give me mortgage at a good rate. My concern is about a home I have found recently at a very good location. I want to buy it, but not as a place to live, but as an investment. Is it possible for me to get a mortgage for this? Is it illegal or something? Please help with valuable advice as soon as possible. Thanks!
Sun Sep 04, 2016 2:09 pm
oldguy Senior Member
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quote: I want to buy it, but not as a place to live, but as an investment. Is it possible for me to get a mortgage for this? Is it illegal or something? Please help with valuable advice as soon as possible. Thanks!
Yes - look on the Aspire website - where it says Property Use, the drop menu is "Personal Residence, Vacation home, Investment Property". Select Investment Property. The requirements for a Non-Owner Occupied house (NOO) are slightly stricter. The obvious reason for most of us, if we ever got into financial trouble we would defend our home and let our rental houses be re-possessed. So your lender needs to be compensated for taking the added risk. Also, they will ask for a higher DP, maybe 25%.
Right now the rate premium for a NOO mortgage is less than 1/2% - over the years I have paid as high as a 1.5% premium for my rental houses.
Sun Sep 04, 2016 3:41 pm
ken-do-nim Full Member
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Do you plan on renting the property? Note that if you have to get a property manager, your earnings will be cut into significantly, but it may still be worth it in the long run. The more important issue is finding a property manager you can trust.
Thu Sep 08, 2016 8:11 pm
sniper338 New Member
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If you cant pay for it cash you wont have a decent return anyways. You would just be taking on more risk
Tue Sep 13, 2016 5:33 pm
oldguy Senior Member
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quote: If you cant pay for it cash you wont have a decent return anyways.
My experience has been the opposite. Eg, if I was going to place $200k into rentals, I would not buy a single $200k house, I would make $50k DPs on 4 $200k houses. In both cases my equity is $200k. But in the latter case I'd have 4 rent checks, about $5000/m. Plus, if the houses had a 20% inflation in a couple years, that would be 20% of $800k, ie $160,000. My unrealized (tax free) capital gain (on my $200k equity) would be over 40%/y. And my 4 renters would be paying my mortgages.
