I recently sat down with a group of investors that are setting out to acquire a portfolio of rental properties. They wanted clarification on the Federal Government changes coming April 19th, and how they will affect the mortgage qualfication process. In addition to having to put 20% down on investment properties, one of the biggest changes involves the bank no longer using a rental income offset for qualification, and instead taking any rental income and adding 50% of it to the applicants income. This has a drastic impact on one’s qualification and results in a reduced amount you may be able to qualify for.
The rental offset, versus added to income, is a complicated concept and difficult to explain. I recently came across a great article that outlines the mechanics of the calculation and illustrates the effect. To read this article, CLICK HERE
For further information on the upcoming changes to the mortgage qualification process, please contact me.