Merix Financial now offers Genworth-insured financing for non-owner-occupied rental properties.
The details:
- Maximum loan-to-value: 80%
- Credit score: 640 minimum
- Maximum TDS: 40% (excluding heat)
- Rental Income: 80% rental offset on all rents
- Pre-approvals: Yes!
It’s rare to see 80% rental offset for all rental income from all properties. The majority of lenders allow only a 50-80% add-back on rental income, especially rent from a non-subject property that is not owner occupied. (That’s relevant because an 80% offset allows for more flexibility than an 80% add-back. In other words, it’s harder to qualify with an add-back).
On exceptional files, Merix will even consider non-conforming rental income (from a basement suite for example) in major urban centers like Vancouver and Toronto.
The only thing we’d wish for is that Merix didn’t have a rate premium on rental deals. But, surcharge or not, Merix is competitive.
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Sidebar: MCAP, Canadiana and Macquarie have their own versions of Genworth’s non-owner occupied rental program with 80% rental offset. Unlike Merix, however, not all of them allow 80% offset on all rent that the borrower receives.
If you don’t mind paying a rate premium, Equitable Trust will finance rental purchases to 85% LTV with a 100% rental add-back.
Incidentally, CMHC (the nation’s biggest default insurer) does not insure rental financing with an offset calculation. That gives Genworth an edge in this department.
It’s nice to see Merix and Genworth sync their underwriting guidelines to come up with a solid product. I’d like to see a high beacon product too, which could match Equitable Trust’s rental mortgage at a better rate. As the owner of 2 non owner occupied rental properties, it is very frustrating to meet with a lender who isn’t up front about how they handle rental income. Those who use a 50% add back or 50% rental offset will turn your 35% TDSR into a 60% TDSR. How banks and mortgage issuers handle Rental and other income should be fully disclosed and not hidden in their internal underwriting documentation.
I have a couple questions:
– Does the rental offset consider all rental income from all properties or just the property being purchase?
– Why would someone choose an insured loan at 80% LTV and pay a premium when it is conventional? Other than for the obvious reason that it’s easier to qualify because of the rental offset, are the rates lower for this Merix product then if you just went conventional at the bank?
– D0 the other lenders that are cited as using a rental offset calculation (MPAP, Resmor, etc.) require default insurance on an 80% LTV loan as well? Is it through Genworth? I’m assuming the Equitable 85% is insured by Genworth
– Does anybody know about if Home Trust uses offset or add back? They will 85% LTV on rentals and there is no insurance premium to pay. Also, their rates are A LOT better than Equitable.
– Yesterday, CMT mentioned that the Merix Rental mortgage can be for stated income deals as well, but no mention in article. Could you please elaborate on that.
Thanks!
I would love it if you could do a regular feature on the comparison of different rental programs across the various lenders.
How does this play out for those who have a larger number of properties? And will they still lend to you. Ie. less than 3, 3-5, 5-8, 8 or more. In particular the last category would be very interesting, as I would assume the number of players would decrease dramatically.
What are the rate premiums? And what is the variance in cost from lender to lender?
It would be great to have a comprehensive Rental Mortgage Comparison chart available on the site.
I second, or third that! :)
Hi David,
1) Yes, Merix’s rental offset applies to all allowable rental income.
2) Sometimes an insured rental mortgage will work out to be cheaper than the alternatives, or be the only way for a client to qualify (depending on the client and on the lender guidelines).
3) Yes, yes and no. Equitable does not insure its rental product.
4) Depends on which product. Home has three rental options: CMHC, Canada Guaranty, or non-insured. The 85% LTV option you refer to is a bundle product with a 2.5% lender fee added to the 5% LTV 2nd mortgage.
5) Genworth’s stated and rental programs are two separate products. As such, Merix’s rental mortgage requires full income qualification.
Cheers,
Rob
Hi Folks, Appreciate the suggestion. I’d love to do a rental comparison when time permits. We have a lot of project on the go but will do it for sure at some point. -Rob
Thank You!
Does anyone know of a GREAT broker who specializes in rental products in SW Ontario?
Someone who knows what deals to take, in what order, to what lenders?
Thanks!
Does this company lend throughout
Canada, or only in major urban centers?
I live in rural N.S. (Yarmouth)
thanks!
Correction: Resmor does offer 80% rental offset via Genworth, but not on non-owner occupied subject properties. Resmor doesn’t lend on non-owner-occupied rentals.
Elizabeth
Canadian Mortgage Trends
Hi Wade,
Merix lends in most provinces (including NS). But, like most lenders, they have specific property criteria. The best bet would be to call a Merix-approved broker in NS for exact details about Yarmouth.
Cheers,
Rob