Home Equity Mortgages From Traditional Banks
Home Equity Mortgages have been created for those individuals that can’t confirm their income by traditional methods, but still demonstrate that they possess a strong lending profile.
While the home equity loan programs from traditional lenders such as banks have some variation among the different programs, most of the criteria for qualifying are very similar.
The main distinctions made within these mortgage programs by institutional lenders relates to the subcategory of borrower. Once an applicant determines which sub class they fit into, then the rest of the related lending criteria can be identified.
More common subcategories include Salaried Applicants, New Immigrants, and Self Employed.
For salaried applicants where the borrower cannot confirm all their income available for mortgage payment servicing, the traditional lenders will consider a maximum loan to value of 50%. The minimum 50% down payment as well as the closing costs need to be confirmed prior to the advancement of funds. There can also not be any secondary mortgage charges placed on the property without the prior written consent of the lender.
To qualify as a Canadian immigrant, the home equity mortgage applicant must have landed immigrant status or proof from Immigration Canada that an application has been made and received. The credit profile of this sub category must be supported by an international credit bureau, a letter of reference issued by a banking institution from their country or origin, or proof of cash deposits large enough to cover the required down payment and at least 6 months of scheduled debt serving payments and property taxes. The maximum loan to value tends to be 65%. For new immigrants to secure loan to values up to 75%, the applicant must further provide evidence of liquid assets equal to at least 50% of the total purchase price of the property.
A Home equity loan for the self employed requires the applicant to have a credit score of at least 720, have no previous personal bankruptcies on report, a minimum of three years credit activity reported on one of the major credit bureaus with at least three different trade accounts, and at least two sources of third party verification that the applicant was indeed self employed for a period of at least 3 years. The loan to value for qualified individuals can go up to 75%.
Once again, please keep in mind that the above serves as a generic guideline and should no way be viewed as the specific requirements for all institutional lenders providing home equity mortgages.
If you’re considering a home equity mortgage, or would like to know more about them, I suggest that you give me a call so that we can go over your options together and decide on the best course of action for you and your family.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel