After years of serving the alternative lending market, AGF Trust has charged into the high-ratio insured mortgage business–with the launch of its “Simple Mortgage.”
The Simple Mortgage rolled out on October 14. It’s designed to be a full-featured mortgage at no-frills rates (currently under 4% on a 5-year fixed). This is a first for AGF as it's never offered fully-discounted insured mortgages before.
All Simple Mortgages are CMHC insured. Interestingly, unlike most new insured products, AGF’s Simple Mortgage is not securitized (resold to investors). Instead, the company says “AGF Trust is currently well capitalized and will hold these mortgages on the balance sheet.” The company says it views insured mortgages as “an attractive asset class.”
Besides solid rates, AGF cites its primary advantages as being:
- A longer rate hold than its no-frills competitors (60 days vs. 30 days)
- More flexible payment and pre-payment options.
AGF also has an opportunity to impress with service, given the subpar turnaround times at many lenders nowadays. (Hopefully AGF has plenty of underwriters on staff to come through on this promise.)
The company says it chose the name “Simple Mortgage” because its mortgage underwriting criteria are “standard, traditional, and basic.” AGF says there is nothing "grey" about this mortgage in terms of qualifying. The goal is to make qualifying “simple black and white.”
Here are the main product details…
- Rate hold: 60 days
- Minimum Credit Score: 620 (600 for co-borrowers)
- Income: Verifiable only (no stated income)
- GDS/TDS: 35%/42% (up to 44% with a 680+ Beacon)
- Lending area: Ontario (other provinces may come later)
- Maximum Mortgage: $750K in GTA; $500K elsewhere
- Minimum Mortgage: $100K
- Maximum LTV: 95%
- Switches: No (Clients must refinance)
- Pre-approvals: No
- Gifted / Borrowed Down Payments: Yes / No
- Lump sum pre-payment option: 20% annual (on any payment date)
- Payment increase option: 20% annually
- Early termination penalty: Greater of 3-months interest or IRD
- Amortization: Up to 35 years
- Properties should be 1-2 units in “readily marketable in urban locations” (no well or septic)
- Owner-occupied properties only
- AGF’s IRD penalty is based on bond yields. (We’ve requested the calculation method and will advise.)
- A good established credit history is essential
The Simple Mortgage is a solid new entrant in a crowded field. However, if AGF stays true to its rate promise, it may have a winner.
For complete details, contact any AGF Trust-approved mortgage planner.