Home Trust has taken bundle mortgages to the next level.
Bundle mortgages consist of an uninsured first mortgage to 80% loan-to-value (LTV) plus a second mortgage for additional funds. Since the financial crisis, they haven't generally exceeded 85% LTV total. Home Trust now offers one at 90%.
Home Trust pulled its bundle mortgages off the market for a while before re-launching them last month. It says that was related to changing investor guidelines. The hiatus also coincided with a reported review of these products by banking regulator, the Office of the Superintendent of Financial Institutions (OSFI).
The target market for its bundle is the borrower who can’t get an insured mortgage for 90% LTV. That could include someone with harder-to-document income, like a self-employed borrower for example.
The minimum credit score for this product is 620.
Instead of a Canada Mortgage and Housing Corporation (CMHC) insurance premium (2.4% on 90% LTV mortgages, effective May 1) Home Trust charges a lender fee.That 2.5% fee can be capitalized into the second mortgage so it's not an out-of-pocket expense.
The product is currently available in big metros like greater Toronto, Vancouver, Calgary, Edmonton and Victoria. Contact Home Trust for its specific lending areas.