CMHC change will allow buyers to use more rental revenue as qualifying income

A rule change from Canada's Crown housing corporation may provide more fuel for Calgary's long-running debate on secondary suites.

Set to take effect Sept. 28, the change will allow homeowners to count 100 per cent of rental income from legal secondary suites as qualifying income applying for a mortgage.

Up from the current level of 50 per cent, Canada Mortgage and Housing Corp. said the changes were made after a review of the corporation's policy for treatment of rental income.

"It appears as though CMHC is making these changes to assist with affordable housing," said Nolan Matthias, broker at Calgary's Mortgage360.

Keys are low vacancy rates, positive net migration

The perfect storm for long-term real estate investing in Calgary continues  to build steam despite low oil prices and fear mongering by industry  naysayers.

In fact, the six market rules Mortgage360 talks about in its Cash Flow Club meetings – which cover market vacancy rates, employment, rental rates and net migration – are still being met, even though some would have you believe the proverbial real estate sky is falling.

Five reasons to buy rentals in Calgary

Despite media headlines and continued sensationalism from economists both domestic and  foreign, Calgary continues to be one of the best places for real estate investment in Canada.

Here are five reasons why:

Vacancy rates remain low: According to the fall 2014 edition of the CMHC Housing Market Outlook for Calgary, vacancy rates remain low at 1.4 per cent and are not expected to exceed 1.8 per cent in either 2015 or 2016. Vacancy rates are deemed favourable for real estate investment when they are below five per cent.

The market conditions in Calgary are perfect for smart, long-term investment in real estate.  The fundamentals are sound. The Calgary real estate market is showing less volatility than  in years' past. Large jumps in prices – either up or down – seem less likely than at any other time since 2006.

Combined with low vacancy rates, rising rents, positive net migration and affordability – which, according to the RBC report on housing trends and affordability, remain at historically favorable levels – now is the right time to start teaching Calgarians how to properly invest in real estate with long term wealth accumulation in mind.

Low rates and product features

For decades, the process of selecting a mortgage has been the same: go to the bank, choose  between a fixed or variable and don't ask any other questions.

Oh how things have changed. A mortgage is no longer just a mortgage.

There are many things to consider when it comes to finding financing. The first and foremost is whether the bank you love for your everyday needs is the one that is right for your mortgage needs. Ask what rates your bank will offer you without any haggling. You may find they're not as attractive as elsewhere.

How to get the best rate

One of the most costly mistakes when renewing a mortgage is to not looking at all the options. Both blindly signing a renewal statement, or not signing one at all, and allowing the mortgage to renew automatically, can be costly.

Here is what you need to know when it comes time to sign on the dotted line, again:

Start looking 13 months before your mortgage renewal date

Depending on your mortgage lender, it may be beneficial to renew or switch lenders more than a year in advance. A low rate for a one- or two-year term can, in many cases, be more financially beneficial than riding out the last year of a current mortgage at a higher rate, even if you have to pay a penalty.