Borrowers with repayment issues now have a new mortgage option thanks to Home Trust’s “Credit Assist” product.
Credit Assist is designed for those who don’t meet insurer guidelines and have “bruised credit.” It’s meant to be a 1-year solution to help people get back on their feet. After one year, the idea is for the customer to renew into a prime mortgage at more favourable terms.
Home Trust officially requires a 520 minimum credit score for approval, but it will consider lower on a “case by case” basis. The key is that borrowers must have verifiable income and a 44% maximum total debt service (TDS) ratio.
Credit Assist lets homeowners borrow up to 85% loan-to-value without needing default insurance. (Normally, LTVs above 80% require insurance from CMHC, Genworth, or Canada Guaranty. The exceptions are called “uninsured mortgages” and they’re offered at higher rates by non-prime lenders.)
Pino Decina SVP of Mortgage Lending says, “Customers can either refinance their existing debt through a Credit Assist Bundle or place a Credit Assist Equity Line Visa behind an institutional first mortgage.” The product is also available for purchases.
Mortgage options for non-prime customers have been limited since the onset of the credit crisis in 2007. Lenders have slowly waded back into this space but choices are still skimpy compared to 3-4 years ago.
In terms of direct competition, Decina says little exists. “HTC has prided itself on providing mortgage solutions for the underserved sectors of the Canadian market and we feel we’ve done it again. We believe we have no institutional competitors for this product.”
Credit Assist will be fully rolled out in Ontario by Friday. It will make its way to other provinces sometime after the initial launch.
For brokers who may be wondering, this product is not related to Genworth’s Credit Assist program that was discontinued in April 2009.
Here’s a summary of the key points:
Max. LTV: 85%
Term: 1 year term
Fee: 1.50% (purchases) to 1.75% (refinances)
Minimum Beacon: 520 (lower evaluated case by case)
Registered As: A 1st and 2nd mortgage (The 2nd is fully open)
Income Type: Verifiable only
Max. Amortization: 30 years
Property Type: Owner occupied and owner occupied rentals
Private sales: Not allowed
Fee to Renew: $400
Lending Area: Marketable urban and suburban properties in Ontario
If you’re a broker wanting more information, Home Trust is hosting a webinar on Wed. Nov. 10 at 2:00-2:30pm EST. Brokers receive a special promotion for attending + .25 CE Credits. Here is the link to register: Credit Assist Webinar Registration
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