Where Do I Get a Student Rental Financed?

by Daniel Lynes
(Hamilton, ON, Canada)

I'd like to be able to purchase some student rentals around the McMaster University area.

However, as soon as the banks hear that it's a student rental, they say, 'No Way!'

I've found a niche market lender that lends on student rentals, but they want 75% LTV, 1 point at closing, 1 or 2 year closed term, and 4.44/5.0% fixed interest rate, even when I've told them I'm planning to live there.

I don't have a problem with the 1 or 2 year term, although I'm not big on it, and I have even less of a problem with the interest rate (although my wife hates it...she wanted variable rate), but we have a problem with the 1 pt and the 75% LTV.

We wanted to get an 85% or 90% LTV mortgage, or an 80% LTV mortgage where we could use our line of credit to partially finance the down payment.

Where the problem lies is that the lender is saying they need 25% down, and we'd like to come up with 10% to 15% down, or come up to 20% down, using LOC's and/or low interest rate credit card specials.

Do you happen to know any we could talk to, to get preapproved for student rentals?

Thanks.

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Feb 04, 2010
Student Rental Financing for Canadian Investors
by: Tom Karadza

Hi Daniel,

We feel your pain!

There are banks that will finance student rental properties with better rates than you've found. But they're always changing their programs so it's best to reach out to them and get the latest.

If you call our office and give Emily your email address I'll pass along a mortgage broker's name and number who knows of such banks. Office: 416-848-6293

However, the down payment problem won't change. Most student rentals will need 25% to 35% down ... I wish I could change that but that's the norm.

Occasionally one of the banks in Canada will change their minds and for a short time have more attractive programs ... so it's really best to chat with an experienced broker.

Also, sometimes at the bank "branch level" they'll do special mortgage programs for student rentals that aren't done on a national level.

For example, somewhere close to McMaster there used to be a Nova Scotia branch that was pretty open to doing Student Rental properties and I remember them having more attractive programs (you'd have to walk in and ask what the latest offerings are). I hope I'm remembering that correctly.

Thanks for the question and hope that helps a bit!

Tom

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