   Owning one or more profitable rental properties can be a great investment and a way to build wealth for retirement. Quality rental units and a good location attract long-term tenants. However, one must be aware of recent changes to legislation instituted by the federal government.
    When seeking mortgage financing for a property that is not ones primary residence, mortgage lenders now require the purchaser to have a 20% down-payment. There are no more 5 or 10 percent down income property deals. On a home purchase, the government created CMHC allows Canadians to obtain a default insured mortgage with as little as 5% down. Through the will of the feds they are no longer extending this default insurance to cover income property purchases. The reason is to  discourage inventors from leveraging their properties too highly. In case property values go down, those who have 5% equity in several rental properties face the risk of "going under water" and ending up in a situation where their mortgage debt exceeds the value of the property.Â
   In an attempt to avoid this 20% requirement, many investors have been tempted to tell mortgage lenders they will be living in the rental property they are trying to buy and renting out the existing property they consider their primary residence. Sometimes unable to verify the buyer`s intentions, some lenders will provide a mortgage on the basis that the buyers are planning to live in the property. However, if a lender bases their decision on such information and it turns out that the property was for rental purposes, the buyers have committed fraud.Â
   The Canadian Association of Accredited Mortgage Professionals (CAAMP) during its 2010 mortgage expo on fraud has identified this as a type of mortgage fraud. Being a self-regulating body that ensures the professional and ethical conduct of mortgage professionals in Canada, CAAMP has instructed its members to take such fraud very seriously and advise their clients accordingly.Â
   This new legislation may seem severe to many investors, however in the long run it is acting in their best interest because it ensures they have sufficient equity to weather an economic downturn.Â
   There are also several other changes to mortgage requirements that the government has initiated. You can access more information on this legislation at http://www.fin.gc.ca/n10/10-011-end.asp and also at www.caamp.ca.
    When seeking mortgage financing for a property that is not ones primary residence, mortgage lenders now require the purchaser to have a 20% down-payment. There are no more 5 or 10 percent down income property deals. On a home purchase, the government created CMHC allows Canadians to obtain a default insured mortgage with as little as 5% down. Through the will of the feds they are no longer extending this default insurance to cover income property purchases. The reason is to  discourage inventors from leveraging their properties too highly. In case property values go down, those who have 5% equity in several rental properties face the risk of "going under water" and ending up in a situation where their mortgage debt exceeds the value of the property.Â
   In an attempt to avoid this 20% requirement, many investors have been tempted to tell mortgage lenders they will be living in the rental property they are trying to buy and renting out the existing property they consider their primary residence. Sometimes unable to verify the buyer`s intentions, some lenders will provide a mortgage on the basis that the buyers are planning to live in the property. However, if a lender bases their decision on such information and it turns out that the property was for rental purposes, the buyers have committed fraud.Â
   The Canadian Association of Accredited Mortgage Professionals (CAAMP) during its 2010 mortgage expo on fraud has identified this as a type of mortgage fraud. Being a self-regulating body that ensures the professional and ethical conduct of mortgage professionals in Canada, CAAMP has instructed its members to take such fraud very seriously and advise their clients accordingly.Â
   This new legislation may seem severe to many investors, however in the long run it is acting in their best interest because it ensures they have sufficient equity to weather an economic downturn.Â
   There are also several other changes to mortgage requirements that the government has initiated. You can access more information on this legislation at http://www.fin.gc.ca/n10/10-011-end.asp and also at www.caamp.ca.