So, you’re interested in buying a home that already has tenants in it — or you plan on buying a home with a rental suite and renting it out once you move in. This has a big change on your mortgage and I’m here to help you understand it.
And don’t worry, it’s not a bad change at all, it can actually help in your mortgage approval!
Many homes have mortgage helper suites located in the basement or in a carriage home on the property.
This is a separate apartment that you are able to rent out with this income being able to help towards your mortgage costs. The suite needs to have a separate entrance as well as its own living, kitchen, and sleeping area. However, there can be a shared hallway, parking area, and laundry room.
Mortgage helper suites have quickly become a very popular option for many homeowners with the costs of housing.
If the suite that you plan to rent out is a self-contained suite, (and can be either legal or non-legal through city bylaws), the borrower can use the projected rental income to help qualify for their mortgage.
This only works if it’s a self-contained suite. If you plan on renting out a room in your home, that income is not permitted. It doesn’t mean you can’t rent out the space, you just can’t use the projected income to help in the qualifying process.
If there are current tenants in the suite of the home you’re purchasing, you will use the rent they are paying written on their lease. If you’re hoping to rent it out once you move in, there is an assessment that has to take place during the mortgage process.
Lenders may require an independent assessment from a licensed property appraiser. If this is the case, I will help coordinate this with you and the new property.
While there are many benefits to having a suite in the home you’re purchasing, there are two main ones.
The first one is the fact that you can use this income to help you qualify for a mortgage. In some cases, this allows clients to qualify for a larger loan and in turn qualify for a larger home. For example, maybe solo you only qualify for a condo, but with the help of a mortgage helper suite, you may be able to qualify for a house in a residential neighbourhood.
The second main benefit is that you will receive monthly rent from your tenants. This will help you pay off your mortgage faster and be able to own your house outright sooner.
Having a rental property within your home is a great investment for your mortgage. Not only will you be able to use the income in the mortgage approval process, you’ll have monthly payments towards your mortgage from the tenants.
If you’re considering buying a home with a mortgage helper suite, it’s imperative that I, your mortgage broker, know about it before you put an offer in. To be able to use this income, I must know about it as soon as possible to add these ratios into the approval application.
If this sounds like you and your current situation, please reach out to me today. Let’s get started on the application process together and I will let you know the documents I will need in order to use the rental income.
You can give me a call at 250-826-3111, contact me through my contact form or apply through my website today. Whichever way you contact me, I will be in touch with you soon!
Let’s get your application off the ground.
