Financing a real estate investment can be a daunting task, especially if you're a first-time investor in Canada. However, with proper planning and a good understanding of the available options, you can secure the financing you need to take advantage of lucrative opportunities.
Conventional mortgage
The most common way to finance a purchase in Canada, through a bank, credit union, or other financial institution. To qualify you'll need a good credit score and a down payment of at least 20% of the purchase price (unless you'll be occupying the home). The main advantage is a typically lower interest rate than other options.
Private mortgage
If you don't qualify for a conventional mortgage or need financing quickly, a private mortgage from an individual or company can be a good option for unique or complex situations, at the cost of higher rates and fees.
Home equity line of credit (HELOC)
If you already own property, a HELOC lets you borrow against your equity for any purpose, including a new investment. Rates are typically variable, and you only make payments on what you borrow.
Rent-to-own
If you can't qualify for a mortgage or don't have a large down payment, a rent-to-own arrangement can provide a path to ownership while you build credit and savings.
Every strategy has trade-offs. Understanding them, and matching the financing to the deal, is where experienced partners earn their keep.