Real Estate

Mortgage Owner Occupied

  • Last Updated:
  • Jan 14th, 2018 4:40 pm
Jr. Member
Oct 21, 2017
162 posts

Mortgage Owner Occupied

When purchasing a home and you are getting a 5 year fixed mortgage and you are not planning on living there until 2 or 3 years later for more savings, brokers tell people to state the home as owner occupied and not as a rental to avoid the higher interest rates but they don't tell you the repercussions.

The repercussions can be very serious. It can be a demand loan.

Why is this still happening and why are the mortgage brokers putting the borrower in such serious risk?

"A few weeks later, I came across another person who casually admitted to telling her mortgage provider that she was purchasing a home as an owner-occupied property when it was really a rental. That happens far more than lenders would like to admit." ... age-fraud/

"If you’re purchasing a home that you plan on renting out, you generally need to have a downpayment of 20% or more. Rapid price appreciation has resulted in people forging owner occupancy to get around this rule.
Turns out it’s actually pretty easy to falsify whether a property is owner-occupied or a rental, which might be why so many Canadians are doing it. “Aside from an affidavit, there is no measure to ensure that property is in fact owner-occupied or was intended to be owner occupied,” explains Scott. “If someone is a first time homebuyer and they want to buy a property with 5% down, and they don’t own another property, if they turn around and rent the place thereafter – there is nothing anyone can do about it.” ... op-broker/
1 reply
Deal Fanatic
May 31, 2007
5018 posts
Yes this has been a bad loophole that many people use to obtain more properties with 5% down. Another trick is to use heloc on one property for down payment and then avoid cmhc fees.