# is is ok to rent the property?



## newhomebuyer (Jan 15, 2011)

Dear All, 
Well..I think I made a big blunder of not doing proper analysis before purchasing a new home and the mistake has already been committed. Recently, we zeroed on a new house and have already been paid the initial amount to the builder. Upon second thought, we realized now that that home would be small for us to live in and the amount is already paid (20K), we are planning to rent it out. This is our first property and as we already paid a huge amount, we wanted to pursue with the property. 

Now the question: Whether am I eligible for Govt Tax Credit? 

Can I rent the property despite the mortgage condition says that the property must be self occupied?

The property is in very good location and I have seen the rental listings going around $1200 to 1300 over there.

Pls pass me back your valuable suggestions.

Sams...


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## Dana (Nov 17, 2009)

newhomebuyer said:


> Can I rent the property despite the mortgage condition says that the property must be self occupied?
> 
> 
> > Technically this is fraud. If you have signed on for a CMHC mortgage, CMHC takes this form of misrepresentation very seriously.
> ...


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## newhomebuyer (Jan 15, 2011)

Hi, 

Thanks for your reply. I don't think the builder will agree to change the model, as all the models are either not good or out of my budget. The only option I am thinking is that to pay atleast 20% of the property amount so that I no logner be fall under CMHC mortgage rules. 

Your advise is greatly appreciated.


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## Pigzfly (Dec 2, 2010)

Is there a buyer's rescission period? If so, have you used that up already?

In BC you have 7 days to walk away for any reason from a contract of purchase and sale with a developer. The financial end is structured several different ways.


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## newhomebuyer (Jan 15, 2011)

Unfortunately, I did realized after the cooling off period. So, I don't have any other option.


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## sprocket1200 (Aug 21, 2009)

that is alot of money for a promise...


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## Berubeland (Sep 6, 2009)

newhomebuyer said:


> Dear All,
> Well..I think I made a big blunder of not doing proper analysis before purchasing a new home and the mistake has already been committed. Recently, we zeroed on a new house and have already been paid the initial amount to the builder. Upon second thought, we realized now that that home would be small for us to live in and the amount is already paid (20K), we are planning to rent it out. This is our first property and as we already paid a huge amount, we wanted to pursue with the property.
> 
> Now the question: Whether am I eligible for Govt Tax Credit?
> ...


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## marina628 (Dec 14, 2010)

Read Rachelle's Blog , I have investment properties that I rent but have enjoyed reading Rachelle's blogs weekly now.What I took from your OP is you obviously are not experienced in Real Estate to go and buy a house that is not even suitable for your family .If I were you I would make that house work ,it is obviously in your budget where the larger home is not.Also it is not so easy to go and get a second house ,banks will only count 50% of your rent towards a mortgage.Don't discount negotiating with the builder ,talk to them ,maybe have them finish the basement to get extra bedroom/bathroom in the house you bought already.


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## sprocket1200 (Aug 21, 2009)

yeah, have two or three suites in it. the more people the better, oh what fun!


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## Dana (Nov 17, 2009)

kubatron said:


> *
> although correct, trust me on this one - the bank would be looking for a grain of sand on a beach when seeing if their clients are renting or not. next to nearly impossible unless you change your mailing address (don't do it).
> 
> cmhc does not take this form of misrepresentation that seriously as the poster said.
> *


*

So are you saying that since there is only a small chance of being caught that mortgage fraud is okay?? As long as he doesn't change his address to tip off the lender, he should go ahead??? 

I underwrote mortgages for 12+ years and trust me, far too many mortgage sales people and borrowers are willing to commit loan fraud - one of the reasons people find themselves overextended and the government has to step in and rein in lending. 

I have been subpeoned to court to testify in cases of mortgage fraud involving CMHC - do you work there? How do you know how seriously they take fraud?

This is an excerpt from their website:

•



CMHC has an excellent relationship with law enforcement and reports cases of suspected fraud to the appropriate law enforcement agencies. CMHC pursues prosecution to the full extent of the law and strongly encourages its lenders to do the same.

Click to expand...

*


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## marina628 (Dec 14, 2010)

sprocket1200 said:


> yeah, have two or three suites in it. the more people the better, oh what fun!


i was referring to fact he may have kids ,in laws and need extra living space for his own family.I am investor and would never recommend he try to make a multi-unit out of this.


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## kubatron (Jan 17, 2011)

Dana said:


> So are you saying that since there is only a small chance of being caught that mortgage fraud is okay?? As long as he doesn't change his address to tip off the lender, he should go ahead???
> 
> I underwrote mortgages for 12+ years and trust me, far too many mortgage sales people and borrowers are willing to commit loan fraud - one of the reasons people find themselves overextended and the government has to step in and rein in lending.
> 
> ...


You do realize that less than 3% of mortgages in Canada are unpaid?

So not sure where you mean that "far too many people" commit fraud and are overextended if 97% of mortgagees pay their mortgages.

Nonetheless original poster must contact lawyer, and builder, to decide what best course of action is, as well as his personal research on this website.


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## ChrisR (Jul 13, 2009)

Is this house really too small for you?

It seems like the wisest thing to do would be to suck it up and live in a small house for a year or two. You can build some equity, save some money, and then sell or renegotiate the mortgage when you buy a larger home.

Alternatively, you could wait till the house is almost built and put it up for sale. In many parts of the country new houses are still selling like hot cakes. Depending on where you are, you may even turn a profit.

Renting the house out doesn't sound like a great idea. Its hard to see how you could possibly break even bringing in $1300 a month on a brand new house... How small is that house anyway?


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