Refinancing in Canada

9 Replies

Hi BP,

I'm trying to refinance a student rental I bought in 2017 in Windsor, ON which has greatly appreciated since. I've talked to a big-six bank and a local credit union but as soon as they find out it's a student rental, they'll only give me a 65% LTV cash-out refi. This is far too low to make it worth it for me. Any tips on getting a lender to get up into the 75-80% range? My next stop is BDC to see if they're really about entrepreneurs.

A couple of options I see are: don’t disclose it’s a reno, don’t disclose that I’m using the cash to buy another property. I’d rather work with a lender that understands the game though. Thoughts?

Find a REI savvy mortgage broker. I know they will get you at or close to 80% LTV if you are using standard residential financing. We use Kyle Green of Green Mortgage Team in Vancouver. They work mainly with investors around the nation like yourself. They helped two of my JV partners out of Toronto this past year. Note I don't get any kickbacks for recommendation.

Is it an obvious student rental? Meaning location and layout/set up of the home. If you can somehow set up a time when you can get all the tenants out of the home when the appraiser comes then you may be able to get away with a loan from an A lender "top 6 banks". This has been done with converted multi families, not sure about student rentals

@Hai Loc very obvious. 2 blocks from university, 6-bedroom, individual leases. It’d be a lot better to find a savvy lender experienced in this asset class rather than attempt to conceal each future-acquired property even if it’s easier to do when still vacant.

Originally posted by @Shawn Quigg :

@Hai Loc very obvious. 2 blocks from university, 6-bedroom, individual leases. It’d be a lot better to find a savvy lender experienced in this asset class rather than attempt to conceal each future-acquired property even if it’s easier to do when still vacant.

Shawn:

If you are renting by the room, lenders will be disposed to see it as a rooming house (whether it is zoned as such or not) - particularly if the appraiser finds distinct evidence (i.e. locks on all bedrooms). 

Is the property a single house or is it segregated into two separate units (or easily segregated).

@Roy N. it's a single house. Our mortgage broker seems to have forgotten that it's a student rental and now, with another property under contract - the down payment for which was coming from the refi - we're under the gun. Any Canadian lenders you know that can make this happen?

Originally posted by @Shawn Quigg :

@Roy N. it's a single house. Our mortgage broker seems to have forgotten that it's a student rental and now, with another property under contract - the down payment for which was coming from the refi - we're under the gun. Any Canadian lenders you know that can make this happen?

Your broker may have forgotten, but when the appraiser reports back to the lender that it is a rooming house, the lender will walk away or only underwrite an LTV of 50-65%.

Your best bet is either a private lender or finding a conventional lender which uses auto-approval software (TD is an example) and mortgage agent/broker who can steer you towards an application that qualifies for auto-approval (if at all possible).

When we were first in the same situation, we approached a family member with a proposal to have their name on title and live in the house (rent and utilities free) in exchange for their serving as the Den Mother to keep the house in order. We lost a rentable room as a consequence, but were able to finance as a primary residence (auto approval) to an LTV of 80%.