Understanding Rental Offset and Choosing the Right Lender for Your Investment Needs
Josh Perez • December 15, 2024
As a mortgage broker, I often hear this question: “Which lender has the best rental offset?” It’s a valid concern for investors, but here’s the truth—it doesn’t really matter.
Let me explain why.
"The best rental offset isn’t necessarily the best lender for your investment needs. It only matters after reviewing your application, documents, property specifics, and what you're hoping to accomplish."
The Best Rental Offset Isn’t Always the Best Option
Imagine this scenario:
- Lender A uses 100% of rental income for calculations.
- Lender B uses 50% of rental income.
On the surface, Lender A seems better, right? But here’s the catch:
- Lender A deducts only the mortgage payment.
- Lender B, meanwhile, deducts the mortgage payment, property taxes, property management fees, utilities, and insurance.
Now which one works better for you? It depends entirely on the specifics of your situation.
Interest Rates Don’t Tell the Whole Story
Here’s another example:
- Lender A offers a 5.75% interest rate and verifies rental income based on what you reported on your tax return. They qualify you for a $700,000 mortgage.
- Lender B offers a 6.5% interest rate but verifies rental income using current leases or market rents from an appraiser. They qualify you for an $850,000 mortgage.
Which lender is better? Again, it depends on your goals, financial profile, and the property specifics.
Tailoring the Strategy to Your Goals
Your investment needs are unique, and the “best” lender depends on what you’re trying to accomplish. Whether it’s:
- Purchasing your first rental property or your tenth,
- Refinancing to pull the maximum equity,
- Setting up a home equity line of credit (HELOC),
- Minimizing your down payment for the next property,
The right strategy involves a lot more than comparing rental offsets or interest rates. It requires a comprehensive review of your application, documents, and long-term goals.
A Call to My Fellow Mortgage Brokers
Let’s be real: reciting rates and offsets without understanding an investor’s full picture is lazy. It’s not just a disservice to investors—it’s a disservice to the value we, as brokers, are supposed to provide. Every situation is unique, and our role is to guide investors toward the solutions that truly fit their goals and strategies.
Final Thoughts
The “best” rental offset isn’t necessarily the best choice for your investment journey. It’s about aligning your financing with your broader investment goals and ensuring that the lender you choose can support your strategy, whether it’s growing your portfolio or maximizing your returns.
If you’re ready to take your investment plans to the next level, let’s connect. Together, we’ll create a tailored strategy to help you achieve your goals.
Going Through a Separation? Here’s What You Need to Know About Your Mortgage Separation or divorce can be one of life’s most stressful transitions—and when real estate is involved, the financial side of things can get complicated fast. If you and your partner own a home together, figuring out what happens next with your mortgage is a critical step in moving forward. Here’s what you need to know: You’re Still Responsible for Mortgage Payments Even if your relationship changes, your obligation to your mortgage lender doesn’t. If your name is on the mortgage, you’re fully responsible for making sure payments continue. Missed payments can lead to penalties, damage your credit, or even put your home at risk of foreclosure. If you relied on your partner to handle payments during the relationship, now is the time to take a proactive role. Contact your lender directly to confirm everything is on track. Breaking or Changing Your Mortgage Comes With Costs Dividing your finances might mean refinancing, removing someone from the title, or selling the home. All of these options come with potential legal fees, appraisal costs, and mortgage penalties—especially if you’re mid-term with a fixed-rate mortgage. Before making any decisions, speak with your lender to get a clear picture of the potential costs. This info can be helpful when finalizing your separation agreement. Legal Status Affects Financing If you're applying for a new mortgage after a separation, lenders will want to see official documentation—like a signed separation agreement or divorce decree. These documents help the lender assess any ongoing financial obligations like child or spousal support, which may impact your ability to qualify. No paperwork yet? Expect delays and added scrutiny in the mortgage process until everything is finalized. Qualifying on One Income Can Be Tougher Many couples qualify for mortgages based on combined income. After a separation, your borrowing power may decrease if you're now applying solo. This can affect your ability to buy a new home or stay in the one you currently own. A mortgage professional can help you reassess your financial picture and identify options that make sense for your situation—whether that means buying on your own, co-signing with a family member, or exploring government programs. Buying Out Your Partner? You May Have Extra Flexibility In cases where one person wants to stay in the home, lenders may offer special flexibility. Unlike traditional refinancing, which typically caps borrowing at 80% of the home’s value, a “spousal buyout” may allow you to access up to 95%—making it easier to compensate your former partner and retain the home. This option is especially useful for families looking to minimize disruption for children or maintain community ties. You Don’t Have to Figure It Out Alone Separation is never simple—but with the right support, you can move forward with clarity and confidence. Whether you’re keeping the home, selling, or starting fresh, working with a mortgage professional can help you understand your options and create a strategy that aligns with your new goals. Let’s talk through your situation and explore the best path forward. I’m here to help.
Mortgage rates in Canada have been falling for most of the past year—and while that sounds like great news, I always encourage clients to pause and look deeper. A quarter-point rate drop might sound huge in the headlines, but in reality, it only saves the average buyer less than $100 a month . Don’t get me wrong—every bit helps—but that small difference isn’t what’s going to change your financial future. “The strategy beats the rate every single time.” — Josh Perez What really matters is how your mortgage is structured—because that’s where the long-term wins happen. Here’s how I approach it with my clients: Focus on Affordability Don’t just chase the lowest rate on paper. The real goal is a monthly payment that fits your lifestyle today while still leaving room for savings, investments, and emergencies. That’s what keeps you comfortable, not stressed. Think Beyond the Mortgage Your mortgage can be more than a payment—it can be a wealth-building tool . Smart amortization choices, extra payments, or using equity strategically later on can make a massive impact on your financial growth. “The right mortgage choice depends on your long-term plan, not just today’s rate.” — Josh Perez Plan for Flexibility If you choose a fixed term, understand the penalties that come with breaking it early. If you prefer variable, be sure you’re comfortable with the payment swings and how they impact your principal over time. The truth is, the “best” mortgage isn’t the one with the lowest rate—it’s the one that’s aligned with your goals, timeline, and flexibility needs . So yes—let’s enjoy the benefits of lower rates, but don’t let the headlines distract you from the bigger picture. The structure of your mortgage—and how it fits into your overall financial plan—is what really moves the needle. If you want to see how this looks with your actual numbers, let’s build a custom strategy together. Schedule a call with me today and I’ll show you exactly how to make your mortgage work smarter for you.
