Mortgages for investment properties
are increasingly difficult to find, according to one industry player, who says his clients are forced to face a new reality.
“Mortgages for rental properties have been hard to get lately; anyone who has more than five rental properties is very challenging,” Dave Griffin of Dominion Lending Centres
Griffin Financial Group told MortgageBrokerNews.ca. “Clients who have built a portfolio (of properties) over the past ten years are now at a statement and you cringe when you get an application from them.”
According to Griffin, many of his investment clients have had their business stalled as a result and, in many cases, the only solution is alternative financing.
“The clients often have to be prepared to spend more on private financing,” he said.
The issue gets even more frustrating when trying to refinance an investment property
, according to one investor, who feels like he is being “punished” by lenders.
“If an investor chooses a higher interest rate, say between 4 and 4.5 per cent, and despite paying off a mortgage at that rate for three or four years, it is very hard to get a lower rate,” Toronto-based investor, Sahil Jaggi said. “Even with a good track record of paying off mortgage and having a lot of equity, they are just looking at income.”
While agreeing that the government’s move to cool the real estate market back in 2012 has helped the country, he says lenders need to look beyond the balance sheet.
“They really need to look at the person and their mortgage history, and do not just put us all under the one umbrella,” he said. “I am increasingly spending more time meeting lenders to refinance my units.
“For example, I am now looking to refinance my condo, a unit that I have been paying at 4.4 per cent,” he continued. “This is time I could be spending looking for more investment opportunities.”