Mortgage Products Available for Investment Properties Financial institutions in Canada offer different mortgage solutions for investment properties. Banks provide loans to borrowers who seek to invest in hotels, apartment buildings, rental homes, and so on. There are long-term and short-term solutions available. Types of Investments, Mortgages, and Features Banks offer loans to applicants who seek to finance the purchase of licensed houses in multiple occupation, residential and commercial investment properties, retail properties with and without living accommodation, warehouses and plants, as well as industrial properties. Bank customers can choose from different types of products such as commercial buy to let, owner occupied, commercial investment mortgages, and others. In Canada, there are two basic types of mortgages – standard and high ratio loans. A high ratio mortgage is when the borrower puts less than 20 percent down. Standard loans come with better interest rates than high ratio ones because they are considered low risk. Besides, the property to be financed determines whether the mortgage is classified as investment or residential. Residential buildings have up to 4 living units. Buildings with more premises are considered commercial properties, and the lending criteria are different. Criteria Financial institutions require that applicants have a clear credit history (e.g. no bankruptcies, consumer proposals, and delinquencies). They should present documents such as cash flow projections, assets and liabilities statements, bank statements, and certified and audited accounts. Banks also require that the applicant does not have a history of wound up and liquidated companies, history of directorships, and so on. Financial establishments look more favorably on borrowers who offer some asset as collateral. Thus your home equity can help your to obtain more favorable terms and rate. You may want to consider a home equity line of credit or loan. One benefit is that as a borrower, you are usually allowed to choose a closing cost option that works best in your situation. You can choose between two options, and one is to make higher monthly payments to cover the closing costs. This option is not available for large loans. Alternatively, you can use a line of credit or loan proceeds to pay the closing costs. Then your interest rate will be lower and your monthly payments more affordable. In any case, the terms vary from lender to lender, including the maximum and minimum loan amount, maximum term, fees, maximum loan to value ratio, maximum advance, and others. There are other factors to consider such as origination charges, discount points, etc. It is important to negotiate with your bank and ask if open mortgages are offered. This is a solution that comes with no early prepayment penalty. The penalty is usually three months of interest. Ask your officer whether they offer portable mortgages. In this case, the mortgage can be moved to another asset or property. Some lenders assess reduced penalties while others don’t charge penalty fees. When it comes to financial institutions that offer investment mortgages, you may want to contact local banks, private loan providers, and hard money lenders.