Real Estate

Mortgage rate for rental vs primary

  • Last Updated:
  • Oct 6th, 2020 8:47 am
[OP]
Sr. Member
Nov 25, 2008
698 posts
31 upvotes
edmonton

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
Member
Jun 15, 2015
336 posts
383 upvotes
Thornhill, ON
Not true, as long as you have an excellent or very good credit rating.
Sr. Member
May 29, 2012
516 posts
177 upvotes
Southern Ontario
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.
Deal Addict
Apr 5, 2016
4788 posts
3286 upvotes
Calgary/Vancouver
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.
Current Fido and Rogers customer.
Ex Koodo customer.
Sr. Member
User avatar
Aug 20, 2020
506 posts
88 upvotes
Scarborough
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
Newbie
Nov 22, 2019
9 posts
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.
Member
Jun 15, 2015
336 posts
383 upvotes
Thornhill, ON
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%.
Deal Addict
Nov 13, 2013
2368 posts
1155 upvotes
Ottawa
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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