Investing in real estate can be a wise decision. By making your purchasing decisions carefully, you can find a home that will bring in a substantial amount of income or that you could flip and make a significant profit. However, before you purchase your investment property, there are several things you need to know.
Make it a Goal to Provide a 20% Down Payment
When you purchase your primary residence, there are several mortgage options available. Several of these financing options make it possible to purchase a home without the full 20% down payment. However, when you purchase a second property in Canada, these options are not as accessible and it is best if you provide a minimum of 20% as a down payment. Additionally, you may not be eligible to receive the same incentives you did when purchasing your first home.
Many Fees are the Same as Your First Home Purchase
When you purchased your first home, there were a plethora of fees and closing costs you had to pay to complete the transaction. This will be similar when purchasing your investment property. You can expect to go through similar steps when purchasing the home and you will notice similar fees as well. However, keep in mind that every real estate transaction can be different and there may be obstacles you face with this purchase that you did not experience during the purchase of your first home.
Applying for a Mortgage Can Be Challenging
To apply for a mortgage on your investment property, you will go through a similar application process as you did on your primary residence. However, be aware that just because you were approved for a home loan once, it does not mean you automatically will be again. You will need to pass through a strict stress test to ensure that you can afford the home.
You will also need to ensure that you have a low debt-to-income ratio. This is one way to improve your chances of being approved for the second mortgage. Additionally, you should make sure your credit score is high and you have a steady income.
Investing in real estate can be a wise decision if you prepare accordingly. If you have any questions about this process or the real estate market in Markham, contact Markham realtor Martin MacFarlane today.