Real Estate

Question about 2nd Property/Mortgage Rules

  • Last Updated:
  • Mar 20th, 2017 9:20 pm
[OP]
Newbie
Oct 9, 2013
74 posts
11 upvotes
Gloucester, ON

Question about 2nd Property/Mortgage Rules

Hello,

I was wondering if anyone, and maybe some of the brokers here could lend a hand.
I've done some reading of old threads and banks/ratehub's websites, but figured someone could offer better advice.

Very short story: I own and live in one home right now. I would like to in the next couple years move into a bigger home, and potentially take on a big renovation if necessary.
I'm trying to figure how to do that being able to complete needed renovations on the new home while living in my current home, and then move into the new home when ready while selling my own home. Essentially, I need to carry two home for several months to a year.

My initial thought is to buy the second home as an investment property/cottage/whatever you want to call it, have it renovated over the 6 monght-1 year after I buy it, and then sell my first home and move in. What type of things do I need to consider? Reading seems to suggest - I need to qualify to carry both mortages, need 20% down, and that I can't avoid CMHC insurance regardless of down payment.

I'm wondering
1) What kind of other criteria I need to meet?
2) What type of interest rates are involved in that scenario, and if they're higher, can I convert to competitive rates, at the 1 year mark when it becomes a principle residence.
3) Is there a way easier way to do this type of thing? (keep in mind, I want to stay in my current home while renovating, as I realize an easy answer would be to rent somewhere else).

Thanks for your help RFD
2 replies
Deal Addict
Feb 2, 2014
4210 posts
847 upvotes
Toronto
Saleshrink wrote:
Mar 19th, 2017 2:09 pm
Hello,

I was wondering if anyone, and maybe some of the brokers here could lend a hand.
I've done some reading of old threads and banks/ratehub's websites, but figured someone could offer better advice.

Very short story: I own and live in one home right now. I would like to in the next couple years move into a bigger home, and potentially take on a big renovation if necessary.
I'm trying to figure how to do that being able to complete needed renovations on the new home while living in my current home, and then move into the new home when ready while selling my own home. Essentially, I need to carry two home for several months to a year.

My initial thought is to buy the second home as an investment property/cottage/whatever you want to call it, have it renovated over the 6 monght-1 year after I buy it, and then sell my first home and move in. What type of things do I need to consider? Reading seems to suggest - I need to qualify to carry both mortages, need 20% down, and that I can't avoid CMHC insurance regardless of down payment.

I'm wondering
1) What kind of other criteria I need to meet?
2) What type of interest rates are involved in that scenario, and if they're higher, can I convert to competitive rates, at the 1 year mark when it becomes a principle residence.
3) Is there a way easier way to do this type of thing? (keep in mind, I want to stay in my current home while renovating, as I realize an easy answer would be to rent somewhere else).

Thanks for your help RFD
Since your intention is to live in the property, you can purchase the home with as little as 5% down and get the best rates out there. However, you will have to qualify to carry both mortgages.

If you can't qualify to carry both mortgages and estimate you will need a place to live in for 6 months - 1 year, you will have to sell your existing house and rent another property for that period of time.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
[OP]
Newbie
Oct 9, 2013
74 posts
11 upvotes
Gloucester, ON
CdnRealEstateGuy wrote:
Mar 20th, 2017 2:21 pm
Since your intention is to live in the property, you can purchase the home with as little as 5% down and get the best rates out there. However, you will have to qualify to carry both mortgages.
Very good to know! Thank you.

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