A finished basement can be a major selling point for a home. It can be a place to set up a home theater, a place for a playroom for the kids, a home office, a gym, a bar, a wine cellar, a hangout spot for the teens, etc. Some people prefer a home with a finished basement because it gives them a lot of flexibility. Others just don't like basements.
From the mortgage side of things, does it matter if a house has a finished or unfinished basement?
What matters to the lenders is to know what you intend to do with the basement space. Whether it is finished or unfinished is not a critical factor.
Some lenders state in their mortgage commitment that borrowers are not allowed to rent out any part of their property. This could pose a problem to both the lender and the borrower if their intent does not align.
Wouldn’t having a finished basement be more advantageous to the lender because it means a higher property value?
It is hard to say. The conditions of the finished basement do matter too and to be honest, this question is best answered by a licensed appraiser. The appraised value of each property depends on many features in the property as well as the comparables in the area.
With regards to property appraisal, as a point of clarification, neither a mortgage broker nor a real estate agent has any influence on the property valuation. That is strictly between the designated appraiser (which the lender selected, not by our choice) and the comparable properties in the area.
This is a common misconception that a mortgage broker has a say on the value of the property for mortgage purposes.
Would it help the buyer to qualify for more if the basement is rented out?
Lenders can be cautious with regards to including rental income towards the borrower’s debt to income ratio qualification.
So the rental income must have supporting documents such as a Lease Agreement, bank statements showing recurring rent deposits, and to some extent, the lenders would ask for the identification of the tenants to confirm it’s not a fraud.
If all documents are in line to support the rental income, yes, having an income-generating rented unit helps the borrowers to qualify for a higher mortgage loan amount.
While we are on that point, there is one thing that caught most borrowers by surprise.
Do you know that most lenders would only account for 50% of the rental income to qualify borrowers?
There is a reason for this limitation. Most lenders assume that half of the rental income goes towards upkeep expenses. However, this limitation varies from lender to lender. So it's good news for those who are reading this press release now. Work with Jermaine Hinds because he has access to lenders who would account for up to 100% of the rental income to qualify you for a mortgage loan.
100% rental income offset towards the debt-to-income ratio
There are several lenders in the list that Matrix Mortgage Global has access to for borrowers who work with them. One of these lenders is an institutional lender that is a big trust company. This lender allows up to 100% of the rental income to offset the borrower’s debt-to-income ratio.
This product is good for both homeowners and real estate investors.
- For home buyers, they can qualify for a higher purchase price. The flip side is, the borrowers have to make sure that they can continue to afford the mortgage payment month to month.
- For real estate investors, this is a great opportunity to tap more equity out of the property and recycle the fund for other income-generating properties.
In both cases, either you are a homeowner or a real estate investor, you will need to have at least a 20% down payment to qualify for this product.
It is a mortgage product offered by an institutional lender in Canada and its operation is regulated by federal legislation.
At Matrix Mortgage Global, borrowers work with reputable lenders with verified identities, not some off-the-street lenders without background checks. The name of the lender will become clear to the borrowers as they work through the application process and the mortgage broker can address their specific questions as they go. As a point of clarification, borrowers can also choose to refuse the mortgage commitment if they are not comfortable with the lender.
A licensed mortgage broker in Toronto
Learn more from the previous press release: click here
Mortgage Broker | Matrix Mortgage Global - Jermaine Hinds
Mr. Jermaine Hinds is a licensed mortgage broker with years of experience in the industry. His insight comes from his many years as an agent and lender, which gives him a broad network that offers clients more than 100 different lending partners who are ready to offer various mortgage solutions, including home equity loans, bridge loans, and other specialized mortgages products. Mr. Hinds has two children and one loving wife with whom he spends most of his time when not working or spending time at the gym! His mortgage license is powered by Matrix Mortgage Global (Brokerage Lic. #11108) in Toronto. Those who would like more information about this topic, please call Jermaine Hinds at (647) 998-2767 or Jermaine@mmgb.ca
About Matrix Mortgage Global:
Matrix Mortgage Global is a Toronto mortgage brokerage that has been awarded 4X Broker Of The Year in 2018, 2019, 2020, and 2021. The company is led by the Chief Executive Officer, Mr. Shawn Allen who smashed the $380M mark in mortgage origination amount during the Great Financial Crisis. Mr. Allen is an international speaker and masterclass host for mortgage brokers in Canada and Australia.
