Personal vs investment property mortgage: What’s the difference?
You’ll typically pay marginally higher rates for an investment property than you will for a personal mortgage. This is because many lenders consider investment property mortgages as more “risky”. This is because there’s a higher likelihood that a borrower will default on an investment property (rather than a property they actually live in).
This risk factor means that investment properties often come with stricter lending requirements, tighter borrowing limits and higher rental property mortgage rates. That said, your risk factor can be reduced if you can show your lender that you have an excellent credit score, a high income, job stability, and significant equity in your primary residence.
Keep in mind that residential lenders can’t fund investment properties where the owner doesn’t spend at least two weeks per year in it.