20 Jan

Leasehold Financing


Posted by: Adam Sale

Did you know some lenders will finance 95% of a leasehold property?

Most of the big 5 banks require a minimum down-payment of 20%, but there are still a few wholesale lenders willing to arrange financing with a down-payment of 5%.

A couple things to note about these lending scenarios are:

  • There must be adequate time left on the lease, for example: A 25-year amortization requires a minimum of 30 years left on the lease.
  • The mortgage needs to be insured
  • Leases must be Provincial, Municipal, SFU or UBC

Also, when advising your clients on the purchase of a leasehold property its worth thinking about their age, financial situation and their plan for the property.

A growing number of elderly homeowners are relying on their house as a form of “retirement savings account” by taking advantage of “reverse-mortgage” products.

A Reverse mortgage product allows elderly-homeowners to supplement their income by withdrawing the equity built up in their property in either a lump-sum payment, or monthly allowance.

A lease-hold property is NOT ELIGIBLE for a Reverse-mortgage if there is less than 75 years remaining on the head lease, or if it’s located on First-nations land.

If you would like more information on regarding financing leasehold properties, please send me a message.

Thanks for reading!

Adam Sale

8 Jan

High Ratio, Insurable, and Conventional Mortgages. Whats The Difference?!?!


Posted by: Adam Sale

I’d like to briefly discuss the 3 categories of mortgages being offered by Prime-Lenders, which one offers the cheapest rates, and why.

High Ratio Mortgages

Down-Payment between 5%-20%; needs to have Canadian Mortgage Housing Corporation (CMHC) insurance. This means the insurance agency that dictates what the lending requirements are. So yes, you may be getting a mortgage through ScotiaBank or TD, but at the end of the day it is CMHC that sets the guidelines on what the lending requirements are. High Ratio Mortgages offer the best mortgage rates because the mortgage is insured. This insurance removes the bank’s risk of a client defaulting on their payments.

The CMHC requirements are standardized between all lenders, allowing very little flexibility between lenders. 

Insurable Mortgages

These mortgages have a minimum of 20% down-payment, are uninsured, but still follow CMHC’s lending guidelines. These guidelines include, and are not limited to, the same debt servicing ratios per-credit score, and must qualify with a maximum amortization of 25 years. Insurable rates are similar to High-Ratio mortgages; however, we begin noticing much more variance between these rates with each lender.

Conventional Mortgages

Mortgages that have a minimum of 20% down payment, and do not follow CMHC’s lending guidelines. Within this “Conventional Mortgage” category we start seeing banks being much more creative with their financing requirements. Rates for conventional mortgages are the highest between these groups and vary the most. A few key features of conventional mortgages worth mentioning are outlined below:

–         30 Year amortization: Most banks offering conventional mortgages will allow the client to qualify using a 30 year amortization to lower their monthly payments.

–         No stress test: Some credit unions offer mortgages that are not required to follow the governments stress-test rules.

–         Equity Financing: Several Prime Lending Banks/Credit Unions offer mortgage programs to clients that have a minimum of 35% down-payment. These programs do not follow the typical income requirements, relying heavily on a common-sense approach.

I hope this clarifies some confusion around the different mortgages, and the varying rates being offered.

For more information, please contact me at 778-215-4121 or by E-mail: adamsale@dominionlending.ca

Thanks for reading!

Adam Sale,