Mortgage rate for rental vs primary

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Oct 6th, 2020 8:47 am

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Oct 5th, 2020 9:30 am

love0715 [OP]: Sr. Member; Nov 25, 2008; 783 posts; 56 upvotes; YORK

Oct 5th, 2020 9:30 am

Mortgage rate for rental vs primary

Hi Can someone let me know is it true that mortgage rate for rental property is higher vs getting rate for primary condo residence ? If true. By how much basis pt typically ?

I heard that from a friend .

Thx
Tc

7 replies

Oct 5th, 2020 10:02 am

DisneyKruze: Sr. Member; Jun 15, 2015; 791 posts; 924 upvotes; Thornhill, ON

Oct 5th, 2020 10:02 am

Not true, as long as you have an excellent or very good credit rating.

Oct 5th, 2020 2:07 pm

tony311: Sr. Member; May 29, 2012; 578 posts; 221 upvotes; Southern Ontario

Oct 5th, 2020 2:07 pm

I can offer some insight.
I currently renewed my rental mortgage with a refinance to withdraw some equity and it seemed like rental properties are about 0.5% higher than if you live in the home.
You can look at ratehub.ca , they have a page that you can choose different option and switch between owner occupied and tenant occupied for rates that are out there.

Oct 5th, 2020 2:40 pm

bomber17: Deal Fanatic; Apr 5, 2016; 5765 posts; 4187 upvotes; Calgary/Vancouver

Oct 5th, 2020 2:40 pm

I’m a mortgage specialist and yes, rental properties have an interest rate higher than primary residence. They may lower the rate down by lowering down their comp but it’s up to the MS or broker. However, as rates are low, it’s only a 0.1% difference for most terms I see.

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Oct 5th, 2020 2:51 pm

NeilJoseph: Sr. Member; Aug 20, 2020; 875 posts; 142 upvotes; Scarborough

Oct 5th, 2020 2:51 pm

There is a lot of variation in the rental mortgage products out there and how each lender evaluates rental properties. The ones which are more lenient on qualifying guidelines tend to have a higher interest rate. In addition, there is no mortgage insurance for rental properties that are not owner-occupied (multiple unit properties can be owner-occupied) and that also plays a part.
Plus, the risk of default can be higher on rental properties and hence the rates tend to be higher.

Neil Joseph
Mortgage Agent, Broker Lic #10530

+1

Oct 5th, 2020 2:59 pm

mortgageshopper2002: Newbie; Nov 22, 2019; 9 posts

Oct 5th, 2020 2:59 pm

Tangerine and Coast Capital do not differentiate between rental and occupied. HSBC asks for 0.15% extra. Simplii also asks for 0.15% extra but in discussion, they were able to bring it down to zero extra.

Oct 5th, 2020 4:28 pm

DisneyKruze: Sr. Member; Jun 15, 2015; 791 posts; 924 upvotes; Thornhill, ON

Oct 5th, 2020 4:28 pm

All else being equal, it does not make sense for an investor to pay a higher mortgage rate for rental as opposed to a principal residence. There are enough lenders out there who want your business. So, negotiate for the best deal. As an example, I am currently paying a variable rate of P-1% on my rentals, i.e. 1.45%.

+1

Oct 6th, 2020 8:47 am

fogetmylogin: Deal Addict; Nov 13, 2013; 3008 posts; 1706 upvotes; Ottawa

Oct 6th, 2020 8:47 am

DisneyKruze wrote: ↑ All else being equal, it does not make sense for an investor to pay a higher mortgage rate for rental as opposed to a principal residence. There are enough lenders out there who want your business. So, negotiate for the best deal. As an example, I am currently paying a variable rate of P-1% on my rentals, i.e. 1.45%.

There are products you simply can't get for a rental property. The same as you will pay higher if you put 20% down over an insured product. Sure you can negotiate off a bad rate.

P-1% is amazing if you just got it. I suspect they gave it to you pre-covid when rates were expected to rise. (In January the best available was P -1.05% for example) It's a good rate anyway and enjoy the 1.45% regardless!

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