Remember the “good old days” when self-employed borrowers could readily obtain stated income mortgages to 80% loan-to-value? It could take years before those days return to the prime mortgage market, if ever.
But a few lenders still offer out-of-the-box solutions for business-for-self (BFS) clients, and B2B Bank is one of them. A few weeks ago it launched its “BFS Expanded” product, a unique mortgage for those who’ve been self-employed for at least two years, with bank statements to support their income.
“We’ve approved mortgages for a variety of BFS individuals/couples such as consultants, truck drivers, accountants and small business owners,” says B2B Bank’s Mary-Claude Tardif.
“What makes B2B Bank’s BFS Expanded program unique is that there are no mortgage insurance premiums on higher LTVs and no lender fees for applicants with [credit scores of 600 or more],” she says. B2B is also flexible on income confirmation, allowing bank statements instead of the two years of tax documents common with many lenders.
Some might mistake this as a non-income qualifying (NIQ) product and wonder how B2B gets away with 80% LTV. But as Tardif explains, “OSFI limits banks to 65% LTV on what they deem to be non-conforming products. The BFS Expanded program is not an NIQ product or non-conforming as per OSFI guidelines, as we are asking for a comprehensive alternative list of documentation to support the income.”
These are the income docs required:
- A signed letter of attestation certifying the forecasted personal income for the next 12 months
- Most recent 12 months’ business bank statements
- Most recent NOA (only to confirm no tax arrears, B2B says)
- Confirmation of 2 years in business (e.g., articles of incorporation, GST/HST registration or business licence)
Here are the mortgage’s main features:
- Maximum LTV: 80% with a 680+ credit score
- Min. Credit Score: 580
- Max. Amortization: 35 years
- Max. GDS/TDS: 35/42, or 39/44 for strong apps with a 680+ credit score
- Optional lump prepayments: 15% once per year
- Optional payment increase: 15% once per year
- Max. Mortgage: $1 million
- Max. Equity Take-out: $200,000 (over and above any consolidation of debt)
- Lender fees: None if the credit score is 600+.
As for rates, B2B uses its posted rates as a base (e.g., 3.14% today on a 2-year fixed) and then discounts or adds a premium based on the deal specifics.
This uninsured product is also available on rental properties. Ask a broker or B2B rep if you need more details.
Rob McLister, CMT (email)