The Power of Rental Income
What is Rental Income?
When you charge a tenant a monthly fee to live in your property, then this monthly fee (rent) is also considered as your income, aka, Rental Income.
This income not only helps with your mortgage payments but will impact the maximum mortgage you can borrow to purchase your new property.
How does it impact your mortgage?
When lenders review your mortgage application, they look for all sources of income and rental income is one of those sources.
However, the entire rent you are planning to charge is not used as income, only a certain percentage (aka offset) is applied when calculating your total income
Calculating the maximum you can borrow
The Canadian Mortgage App makes it easy for you to figure out the maximum loan using industry standard.
We follow all the B-20 guidelines suggested by the Residential Mortgage Underwriting Practices and Procedures by the Office of the Superintendent of Financial Institutions of Canada to estimate it.
Simply open the app, and:
1. Visit the Stress Test tool
2. Add Rental Income
3. Watch your maximum loan increase
Are you a PRO?
The rental income feature has a number of options designed for industry professionals, including changing the rules from "add back" to "reduce & add" in case your clients are looking at purchasing a non-subject property.
As a mortgage agent, you can also modify the rental income offset or specify a custom percentage. For advanced options, check out the menu in the top right corner of the stress test tool.