Here’s a quick look at lenders who launched (or re-launched) mortgage products in the past few weeks.
Optimum’s Opti-85 Returns
After pulling its Opti-85 bundled mortgage from the market last fall, Optimum Mortgage has revived it. Lester Shore, Optimum’s VP, explains, “OFSI has issued a clear statement on what is acceptable on co-lending and our Opti-85 is in compliance with that directive. Accordingly, we have resumed offering that product.”
Opti-85 is an uninsured 85% loan-to-value stated income solution with two parts: a first mortgage up to 75% LTV and a second up to 85% LTV.
It’s suited to clients who can’t prove income in traditional ways. That includes the self-employed and those on commission and tips. Real estate investors in Ontario can also qualify for it.
The fact that OSFI signed off on the Opti-85 is reassuring. There’s been speculation that bundled mortgages might go extinct. That would have reduced options for high-ratio borrowers who don’t qualify for insured mortgages.
Equitable Bank is another lender with this type of product.
Meridian Credit Union has brought back its line of credit in 2nd position. Customers can use it to add a HELOC behind another lender’s first mortgage.
Meridian is one of few lenders to offer this product at competitive terms. But it gets better. Meridian’s qualifying rate is only prime + 0.75% (i.e., 3.75% currently)—well below the 5-year posted rate the banks use. And it uses a low interest-only LOC payment to calculate TDS.
Meridian even approves stated income with this HELOC at a very reasonable prime + 1.00%.
Meridian’s 2nd HELOC is a less costly alternative to high-priced second mortgages. It’s also well suited to a person who has a closed mortgage and needs more money, but can’t refinance or add a LOC with their existing lender (due to high fees, penalties or an unattractive rate).
Standard appraisal and legal fees apply.
First National’s Enhanced Transfer Program
First National now has a streamlined system to accept transfers of high-ratio collateral charges.
This program applies to collateral mortgages from lenders like TD, Scotiabank, credit unions, and so on. The existing mortgage being transferred in must already be insured.
Unfortunately, unlike a standard non-collateral switch, the client must pay all of the closing costs.
A side note: Collateral charges generally require a refinance for a borrower to switch lenders. Many aren’t aware that this is possible for high-ratio mortgages due to federal rules against refinancing above 80% loan-to-value. However, CMHC does in fact allow lenders to submit high-ratio refinances (for the purposes of switching lenders) if they entail no increase in risk. In other words, the loan amount and amortization cannot increase.
Various lenders process such deals, but not all.
Rob McLister, CMT
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