Getting a Mortgage for a Rental Property?

When you take out a mortgage loan for a rental property, especially through a limited company or holding company, lenders take on risk that they can't fully offset through the property alone. Rental income can be variable, vacancies happen, and property values fluctuate. A personal guarantee gives the lender a fallback: if the company can't pay, they can pursue you personally for the outstanding amount.

This is standard practice across Canadian commercial and investment property lending. Most lenders that allow a mortgage in a holding company's name require a personal guarantee from the actual borrowers, meaning they could pursue the guarantors personally if the company defaults on the loan. It's worth understanding this before you commit to a corporate ownership structure. We're not saying this to put you off it, but so that you go in with a clear picture of what you're taking on.

No, and it's worth being clear on the difference because the two products are often confused.

CMHC mortgage default insurance (and equivalent products) protects the lender if you default on your mortgage.

It doesn't protect you.

Purbeck PGI works the other way around: it protects you, as the personal guarantor, from the financial consequences of a default. The two products address different risks and can sit alongside each other. 

When you take out a PGI policy, you're insuring a set percentage of your personal guarantee liability. If your rental property or holding company defaults on the mortgage and the lender calls on your guarantee, Purbeck manages the claim process on your behalf and the covered amount is paid directly to the lender by Markel International. You're not left negotiating alone at what would already be an incredibly stressful time.

Cover is available up to 90% of the personal guarantee amount, giving you a meaningful buffer between a property problem and a personal financial crisis.

Rental property PGI is available to landlords and property investors who have personally guaranteed a mortgage loan for a rental property, whether that property is held in their personal name, through a limited company, or through a holding company structure.

If you've signed a personal guarantee as part of securing the mortgage, you're eligible to apply. 

If you have personal guarantees in place across several properties or facilities, we can look at covering them under a single policy.

As your portfolio grows, so does your combined guarantee exposure; it's worth having a conversation about how to structure your cover as you scale rather than reviewing it one property at a time. 

Your premium is calculated as a percentage of the personal guarantee amount. The rate that applies will depend on factors including the property type, the loan structure, your credit profile and your lender's requirements.

Provincial premium tax also applies and varies depending on where you're based. We'll confirm the applicable figure clearly when we provide your quote, so there are no surprises.