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mortgage input needed

P

Pump

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was thinknig about buying a purely investment property 4-6 plex to start with, been reading a lot and finally called up a local branch of my major bank only to get something no one else has ever mentioned.

little background... currently have my own principal house totally paid off about 6-7 years ago, worth about 200k on the low side. bought a second house for my son to live in since his credit was crap, that was about 4 years ago and that place is worth about 280k on the low side with a 85k mortgage on it. have good credit, don`t know my number but never had an issue ever with credit and always pay everything on time, no balance on credit cards etc. called up the bank we have the current mortgage with and asked about getting another mortgage for an investment property. he told me i would need 100k in liquid assets before they would do a mortgage on a 3rd property, especially for an investment property. so unless i have 100k in my bank account they are saying i can`t get a mortgage and that is standard across most major banks.

we don`t really want to remortgage the current 85k on my sons place because that is locked in at a good term and is a 10year mortgage. he likes knowing what he has to pay and the flexibility this mortgage offers.

so i am very confused and was hoping someone in the mortgage field or with experience could give me some input.

Also located in ontario if that helps...

plus no issue at all qualifiying for my sons mortgage at all 4-5 yrs ago
 
QUOTE (Pump @ Feb 3 2010, 02:23 PM) was thinknig about buying a purely investment property 4-6 plex to start with, been reading a lot and finally called up a local branch of my major bank only to get something no one else has ever mentioned.

little background... currently have my own principal house totally paid off about 6-7 years ago, worth about 200k on the low side. bought a second house for my son to live in since his credit was crap, that was about 4 years ago and that place is worth about 280k on the low side with a 85k mortgage on it. have good credit, don`t know my number but never had an issue ever with credit and always pay everything on time, no balance on credit cards etc. called up the bank we have the current mortgage with and asked about getting another mortgage for an investment property. he told me i would need 100k in liquid assets before they would do a mortgage on a 3rd property, especially for an investment property. so unless i have 100k in my bank account they are saying i can`t get a mortgage and that is standard across most major banks.

we don`t really want to remortgage the current 88k on my sons place because that is locked in at a good term and is a 10year mortgage. he likes knowing what he has to pay and the flexibility this mortgage offers.

so i am very confused and was hoping someone in the mortgage field or with experience could give me some input.

Also located in ontario if that helps...

plus no issue at all qualifiying for my sons mortgage at all 4-5 yrs ago

Find yourself another bank or mortgage broker as this is not a requirement at all banks. You can also set up a HELOC on your principal residence as a secured line of credit could be seen as a liquid asset I believe. I have never had 100K in liquid assets as you defined it above and I have never had a problem with financing on residential terms.

Then again, if you are looking at a 4plex-6plex, you may be looking at a commercial mortgage and that`s where the requirement is coming from. My suggestion would be to look around. I believe RBC does Residential mortgages up to 6plexes.
 
QUOTE (fumbrunner @ Feb 3 2010, 03:17 PM) Find yourself another bank or mortgage broker as this is not a requirement at all banks. You can also set up a HELOC on your principal residence as a secured line of credit could be seen as a liquid asset I believe. I have never had 100K in liquid assets as you defined it above and I have never had a problem with financing on residential terms.

Then again, if you are looking at a 4plex-6plex, you may be looking at a commercial mortgage and that`s where the requirement is coming from. My suggestion would be to look around. I believe RBC does Residential mortgages up to 6plexes.

he explained we have to be able to prove the 100k is above and beyond in order to show that we can fix a roof or if we a tenants who don`t pay rent for 2-3 months etc.

so bascially my understanding is we need 20% down plus 100k in liquid assets... he said this was pretty much standard across all the major banks. just seems really weird when i had never heard about anything like this in my reading on here and in books.
 
QUOTE (Pump @ Feb 3 2010, 03:27 PM) he explained we have to be able to prove the 100k is above and beyond in order to show that we can fix a roof or if we a tenants who don`t pay rent for 2-3 months etc.

so bascially my understanding is we need 20% down plus 100k in liquid assets... he said this was pretty much standard across all the major banks. just seems really weird when i had never heard about anything like this in my reading on here and in books.

Again, that may be commercial terms, which I have not dealt with but others may chime in. I would still seek a second (and third) opinion.
 
Things are definitely tougher, but by the sounds of it you should have no problem. Find a good broker, REIN member prefer\rably, and let him go to work for you.

One possibility is to get a line of credit up to 80% value of your home and use that as source of down payment and liquidity, but as I said, a good broker will work this out for you. I can recommend someone if you want.

Rob
 
QUOTE (Pump @ Feb 3 2010, 01:23 PM)
... so unless i have 100k in my bank account they are saying i can't get a mortgage and that is standard across most major banks.



we don't really want to remortgage ..



plus no issue at all qualifying for my sons mortgage at all 4-5 yrs ago


Step one: get a LOC on your house .. say 75% LTV or 150K



Step 2: write a cheque to yourself for $100,000 .. and stick it in a money market fund @ 1-3% ..



yes, you will have to pay prime or 2.25% .. or $1000 for 6 month



NOW YOU HAVE LIQUID CASH.



It has to sit there for 3 or more month for banks to recognize it as "cash". Then, after 3 months, apply for a mortgage for a property that makes sense. Once asset is purchased, stick the 100K back into the LOC to bring it to 0.



very real estate investor needs a (fully maximized, and occasionally drawn) LOC .. even if never used .. for "the deal of a lifetime" or as reserves ! Draw on it every 3 months for $12,000 or more .. for a few days .. then pay it back .. so it is flagged as "active" by bank so it won't get canceled or reduced.



Have dinner once in a while .. on the house !



Related posts:



LOC vs. mortgage: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html



How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html



5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html



8 mistakes to avoid in real estate syndications: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-13817-Real_Estate_Syndications_-_A_Good_Idea_.html
 
QUOTE (ThomasBeyer @ Feb 3 2010, 03:33 PM)
Step one: get a LOC on your house .. say 75% LTV or 150K



Step 2: write a cheque to yourself for $100,000 .. and stick it in a money market fund @ 1-3% ..



yes, you will have to pay prime or 2.25% .. or $1000 for 6 month



NOW YOU HAVE LIQUID CASH.



It has to sit there for 3 or more month for banks to recognize it as "cash". Then, after 3 months, apply for a mortgage for a property that makes sense. Once asset is purchased, stick the 100K back into the LOC to bring it to 0.



Related posts:



LOC vs. mortgage: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html



How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html



5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html



8 mistakes to avoid in real estate syndications: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-13817-Real_Estate_Syndications_-_A_Good_Idea_.html








thanks for everyones input on this. has anyone else run into this issue? is this a standard that is at most banks?
 
QUOTE (Pump @ Feb 3 2010, 03:40 PM) is this a standard that is at most banks?
yes
 
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