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Accredited Mortgage Professional (AMP)

Accredited Mortgage Professional (or AMP) is a professional designation created the by Canadian Association of Accredited Mortgage Professionals. It essentially a designation that demonstrates commitment to ongoing education and ethical behaviour in the mortgage industry

Adjustment date

The date the buyer assumes responsibility for property taxes, rates, utilities etc…

Accepted Offer

Once both purchaser and vendor agree to all terms and conditions and the Contract of Purchase and Sale has been signed, dated, and witnessed, you have an accepted offer and are in a binding contract, subject only to the conditions being satisfied

Accelerated Bi-Weekly

Payments are exactly half a monthly payment amount collected every two weeks. At least twice a year you will have three payments in a month allowing for an extra payment a year to be made against the principle of your mortgage. There will be a total of 26 payments made per year.

Agreement of Purchase and Sale

A legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached), or conditional (certain conditions must be fulfilled before the deal can be closed)

Amortization Period

The time over which all regular payments would pay off the mortgage. This is usually 25 years for a new mortgage, however can be greater, up to a maximum of 35 years

Appraisal

The process of determining the value of property, usually for lending purposes. This value may or may not be the same as the purchase price of the home

Appraisal Value

An estimate of the market value of the property

Application (Mortgage)

This is a document that will contain all necessary information about the applicant(s) for the purpose of obtaining a mortgage. Information required will be but not limited to Full name, birth date, employment history, address, SIN # etc.

Arm’s Length Sale

‘Bona fide arm’s-length sale’ means a transaction in cash (or terms equivalent to cash) for specified property rights after reasonable exposure in a competitive market between a willing, well informed and prudent buyer and seller and assuming neither party is acting under undue compulsion or duress

Assets

These are items that you own. Take the value of the item and subtract any liability attached to it. That gives you the asset value or positive value of the item.

Assignment of Interest

An assignment of interest in a mortgage most commonly occurs when switching a mortgage from one lending institution to another.
Instead of the borrower incurring high legal costs to discharge one lender’s mortgage and register documents from another, a legal ‘assignment of mortgage’ is registered with the Land Titles Office. The assignment document recognizes that the debt has been legally transferred from one lender to another.

Assumption/Assumable Mortgage

If the buyer of a property takes over the conditions of the seller’s mortgage (the amount owing for the remaining term at the existing rate ), this is called assumption of the mortgage.

Blended Payments

Payments consisting of both a principal and an interest component, paid on a regular basis (e.g. weekly, biweekly, monthly) during the term of the mortgage. The principal portion of payment increases, while the interest portion decreases over the term of the mortgage, but the total regular payment usually does not change.

Blended Rate Mortgage

With this option you get to keep the balance of your present mortgage interest rate, with only the new amount at today’s mortgage rates. Because you are keeping the terms of your current mortgage contract, there is no penalty involved.

Bridge Financing/Interim Financing

This is short term financing to bridge the time gap between when you have to pay the balance of money for your new home, and the date you receive funds for the sale of your present home.

Canada Mortgage and Housing Corporation (CMHC)

The National Housing Act (NHA) authorized Canada Mortgage and Housing Corporation (CMHC) to operate a Mortgage Insurance Fund which protects NHA Approved Lenders from losses resulting from borrower default. This is one of the Canadian mortgage insurance companies.

Capped Rate Mortgage or Frozen Payment

These are variable rate mortgages that the lending institution has rate ‘capped’. In other words, the rate will fluctuate with prime, but the institution guarantees that you will not pay more than a certain interest rate, set by them.

Cash Back Mortgage

The amount of the ‘cash back’ is a percentage of the mortgage amount you are borrowing – usually 3%. For example, if you borrow $100,000 you could receive as much as $3,000 back from the lender. There are several negative aspects to these offers.

• You will probably pay the full posted interest rate.
• You cannot use the funds as part of your down payment.
• If you pay off the mortgage before the end of the term you will have to repay the lender some of the ‘cash back’ money.

The advantage is, you can choose how to spend the cash you receive. For example, you may have too much credit card debt and by paying down your debt you may qualify for a bigger mortgage.

Certificate of Location or Survey

A document specifying the exact location of the building on the property and describing the type and size of the building including additions, if any.

Certificate of Search or Abstract of Title

A document setting out instruments registered against the title to the property, e.g. deed, mortgages, etc.

Clear Title

Property against which no mortgages are registered.

Closed Mortgage

Various expenses associated with purchasing a home. These costs can include, but are not limited to, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium common expenses, if any.

Closing Date

The date on which the sale of a property becomes final and the property gets paid for.

CMHC, Genworth or Canadian Guaranty Insurance Premium

Mortgage insurance insures the lender against loss in case of default by the borrower. Mortgage insurance is provided to the lender by CMHC, Genworth or Canadian Guaranty and the premium is paid by the borrower.

Commitment Letter

Written notification from the mortgage lender to the borrower approving a specified amount of mortgage funds under specified conditions (e.g. a satisfactory appraisal of the property to be mortgaged).

Compound Period

The number of times per year in which the interest rate is compounded. In Canada, mortgages are generally compounded semi-annual, which is twice per year.

Conditional Offer

An offer to purchase subject to conditions. These conditions may relate to financing, or the sale of an existing home. Usually a time limit in which the specified conditions must be satisfied is stipulated.

Conventional Mortgage

A mortgage that does not exceed 80% of the purchase price of the home. Mortgages that exceed this limit must be insured against default, and are referred to as high-ratio mortgages.

Convertible Mortgage

These are fixed rate mortgages for terms of 6 months or 1 year. Not all lending institutions offer convertible mortgages. With a convertible rate mortgage you can lock into a longer term during the current term of your mortgage without penalty – but only with the same lender. For example, if after a couple of months you hear that interest rates are going to increase, you may change to a longer term mortgage such as the 5 year term.

Conveyance

The transfer of ownership from one person (or company) to another.

Co-Signor

When more than one person is borrowing money; all persons signing the mortgage contract are considered co-signers. The obligation of each person is ‘joint and several.’   This means that collectively they owe the debt, but also each individual signing owes the whole amount borrowed and the whole amount of each payment.

Credit History

Your credit history is a record of any debt or loan that you hold, held in the past, or for which you have applied. It also includes the credit limits of those debts, loans or debts guaranteed and your payment history. It is used by lenders as part of the decision making process when evaluating whether to extend new or additional credit to a borrower. Your credit history is compiled by Canada’s major credit bureaus: Equifax &TransUnion.

Credit Rating

An assessment of an individual’s credit worthiness to estimate his/her ability and willingness to pay credit obligations. Banks and financial organizations refer to credit ratings when considering applications for loans and credit cards.

Debt-Service Ratio

The percentage of the borrower’s gross income that will be used for monthly payments of principal, interest, taxes, heating costs and condominium fees.

Deed (Certificate of Ownership)

The document signed by the seller transferring ownership of the home to the purchaser. This document is then registered against the title to the property as evidence of the purchaser’s ownership of the property.

Default

Non-payment of installments due under the mortgage contract. Not keeping up with your mortgage payments (or property tax payments) can eventually lead to foreclosure on the property.

Deposit

A sum of money deposited in trust by the purchaser when making an offer to be held in trust by the vendor’s agent, broker, lawyer or notary until the closing of the transaction.

Downpayment

The amount of money that you are paying towards the purchase of your home is called the downpayment. This is also known as the ‘equity’ that you will have in the property. You should have a good idea of how much you have before talking to your mortgage broker.

You will have to show lenders proof of your downpayment – for example: if it is in a savings or investment account, or an RRSP, most lenders will require proof that you have had the funds for three months. This can be done by taking current statements with you.

If it is a gift from a family member, you will eventually have to get them to sign a letter saying that the money is a gift and not to be repaid. You will also need to show proof that they have the funds and the funds must be transferred into your account prior to closing date.

Effective Interest Rate

This is the actual interest rate paid on a loan or mortgage. In Canada, mortgages typically have a higher effective interest rate because of the fact that interest rates are compounded semi-annually or twice per year.

Equity

The interest of the owner in a property over and above all claims against the property. It is usually the difference between the market value of the property and any outstanding encumbrances.

Fire Insurance

Before a mortgage can be advanced, the purchaser must have arranged fire insurance. A certificate or binder from the insurance company may be required on closing.

Firm Offer

An offer to buy the property as outlined in the offer to purchase with no conditions attached.

Fixed-Rate Mortgage

A mortgage for which the rate of interest is fixed for a specific period of time (the term).

Foreclosure

A legal procedure whereby the lender eventually obtains ownership of the property after the borrower has defaulted on payments.

Genworth Financial Insurance

An alternative to CMHC and Canadian Guaranty, Genworth Financial offers insurance solutions for when the lender requires the borrow obtain additional risk insurance. Good examples are:

• LTV’s (Loan to Value) exceeding 80%
• Stated income programs
• New to Canada Programs
• Etc.

Gift Letter

A letter from a family member, you will eventually have to get them to sign a letter saying that the money is a gift and not to be repaid. You will also need to show proof that they have the funds and the funds transferred into your account must be prior to closing date.

Gross Debt Service (GDS) Ratio

The percentage of gross income required to cover monthly payments associated with housing costs. Most lenders recommend that the GDS ratio be no more than 32% of your gross (before tax) monthly income.

Gross Household Income

Gross household income is the total salary, wages, commissions and other assured income, before deductions, by all household members who are co-applicants for the mortgage.

Guarantor

A person who promises the lender she or he will repay a debt if the principal debtor defaults.

A guarantor will be requested if the clients who apply for a mortgage are unable to obtain financing by themselves. Circumstances where this could happen would include: insufficient employment history, poor history of debt repayment or un-confirmable income (see application process). The guarantor becomes part of the mortgage application / approval process. The guarantor will have to disclose his or her assets & liabilities, income, and have a credit check done. The total ‘picture’ of all applicants is considered by the lender.

High Ratio Mortgage

If you don’t have 20% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC, Genworth or Canadian Guaranty. The insurance premium is charged only once (per mortgage), when the mortgage funds are advanced. You can pay the premium yourself, but most people choose to add the funds on top of the mortgage.

Holdback

An amount of money required to be withheld by the lender during the construction or renovation of a house to ensure that construction is satisfactorily completed at every stage.

Home Equity

The difference between the price for which a home could be sold (market value) and the total debts registered against it.

Inspection

The examination of the house by a building inspector selected by the purchaser.

Interest Rate Differential Amount (IRD)

An IRD amount is a compensation charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that we can now charge when re-lending the funds for the remaining term of the mortgage.

CLICK HERE for out penalty calculator which includes IRD calculations

Interest Only Mortgages

Credit lines and equity access mortgages are usually ‘interest only.’ The lender will normally require you to pay the interest owing on a monthly basis, but payments reducing the balance owing are controlled by the borrower.

Inter-Alia Mortgages

An inter alia mortgage is a mortgage secured by more than one property. A single mortgage document is registered, covering all properties used as collateral.

Interim Financing

Short-term financing to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

Joint Tenancy

‘Joint tenancy’ means ownership of real estate property is in the names of more than one person, each having an undivided interest. For example, if there are two people, they each own 50 %; three people own 33.33% each; four people own 25% each etc. In the event of the death of one person, ownership automatically passes to the others.

Liabilities

These are your outstanding debts. The opposite of assets are liabilities.

Legal Description

As well as having a civic address (e.g. 123 Main Street), all properties have a legal address, or description. This is the formal identification of each division of property.

Lien

A claim registered against the title of a property for money owing. For example, if a company does construction work on your house, but is not paid, that company may register a lien against the property. The lien must be properly filed by the claimant and has a limited life, which varies by province. As long as the lien holder takes action within the prescribed time period the homeowner may be obliged to pay the amount claimed by the lien holder. The lien holder can force the sale of the property to pay off the debt.

Loan to Value (LTV)

This is the ratio between the mortgage amount and the value of the property, usually expressed as a percentage.

Maturity Date (Renewal Date)

Last day of the term of the mortgage agreement.

Mortgage

Money is borrowed from a lender to buy property. The lender registers the debt (the mortgage document ) against the property to ensure the money is repaid. If the mortgage payments are not made, the lender can start foreclosure proceedings.

Mortgage Critical Illness Insurance

Mortgage Critical Illness Insurance is available as an enhancement to Mortgage Life Insurance and can pay off your mortgage if you are diagnosed with life-threatening cancer, heart attack or stroke.

Mortgagee and Mortgagor

The lender is the mortgagee and the borrower is the mortgagor.

Mortgage Life Insurance

A form of reducing term insurance recommended for all mortgagors. If you die, have a terminal illness, or suffer an accident, the insurance can pay the balance owing on the mortgage. The intent is to protect survivors from the loss of their homes.

Mortgage Term

The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.

Notice of Assessment (NOA)

This is also known as an NOA. It is the summary form that Revenue Canada sends you after your income tax has been filed. It specifies what you claimed on your taxes last year, as well as the amount of taxes you owe, or the amount of money that you will be received as a tax refund.

Open Mortgage

A mortgage which can be prepaid at any time, without penalty.

Payment Frequency

The choice of making regular mortgage payments every week, every other week, twice a month or monthly. It is recommended that you use an accelerated bi-weekly payment (every 14 days). This mortgage trick forces you to pay an extra payment each year without really affecting your monthly budget. This extra payment goes towards your principle which can save you thousands down the road.

Personal Covenant

When funds are borrowed in the name of a company, the owners or directors will usually be asked for their ‘personal covenant.’ If the company defaults on the mortgage, the lender has the right to sue the individuals who have given their covenant (or guarantee).

P.I.T. (Principal, interest and taxes)

Together, these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments.

Porting

This allows you to move to another property without having to lose your existing interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.

Posted Rate

When you walk into any branch of a financial institution you will usually see a bunch of numbers stuck onto a board. This will be their ‘posted’ interest rates.

The financial institutions advertise their ‘posted rates’ – usually both lending and deposit rates. These are the interest rates that appear in the newspapers and on their web sites. Even if you phone your local branch, these will usually be the rates you are quoted.

Possession Date

The date that you receive access to the property (usually the day after completion date).

Prepayment Charge

A fee charged by the lender when the borrower prepays all or part of a closed mortgage more quickly than is set out in the mortgage agreement.

Prepayment Option

The ability to prepay all or a portion of the principal balance. Prepayment charges may be incurred on the exercise of prepayment options.

Principal

The amount of money borrowed for a new mortgage.

Property Transfer Tax

In BRITISH COLUMBIA the Property Transfer Tax (PTT) is as follows:

1.0%  on the first $200,000

2.0%  on the remainder

Private Mortgage

A private mortgagee (lender) is usually considered a ‘lender of the last resort.’ The money lent to a borrower is usually from private sources – people who have lots of money to invest, and are willing to lend at high interest rates, secured by a mortgage on your property. There are few reasons to borrow from a private lender. For example, a very poor credit rating or a lack of equity. The interest rates on private mortgages are very high – almost double bank rates. This reflects the extra risk involved with these loans.

Refinancing

Renegotiating your existing mortgage agreement. May include increasing the principal or paying out the mortgage in full.

Renewal (mortgage)

At the end of a mortgage term, the mortgage may “roll over” on new terms and conditions acceptable to both the lender and the borrower. This is known as renewing a mortgage. Otherwise, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

Reverse Mortgage

A reverse mortgage allows homeowners to convert equity in their homes into cash, without selling the property or having to make monthly payments.

To qualify, homeowners must be at least 62 years old, have significant equity in their property and live in B.C. or Ontario. The homeowner retains ownership and possession of the house. The lending company registers a reverse mortgage against the property. At death, or when the house is sold, the loan and the accrued interest must be repaid.

Revolving Line of Credit

An agreement between a lender and a borrower where the lender agrees to loan a specific amount to a borrower. Once the money is repaid, the borrower is allowed to borrow the amount again. Credit cards are an example of revolving credit.

Security

In the case of mortgages, real estate offered as collateral for the loan.

Second Mortgage

Any additional mortgage legally registered against a property that already has a mortgage.

Tax Deductible Mortgage

Designed to generate Tax Refunds from mortgage payments. This technique has become increasingly popular. In effect, the interest you pay on your   mortgage becomes tax deductible. That means if you spend $20,000 in interest payments, you can deduct that from income on your tax form and receive about $8000 in refunds every year depending on your tax bracket.

Term

The length of the current mortgage agreement. A mortgage may be amortized over a long period (such as 35 years) with a shorter term (six months to five years or more). After the term expires, the balance of the principal then owing on the mortgage can be repaid or a new mortgage agreement can be entered into at the then current interest rates.

Total Debt Service (TDS) Ratio

The percentage of gross income needed to cover monthly payments for housing and all other debts and financing obligations. The total should generally not exceed 40% of gross monthly income.

Variable Rate Mortgage

A mortgage for which the rate of interest may change if other market conditions change. This is sometimes referred to as a floating rate mortgage.

Canada Guaranty Insurance

A Canadian private investor group, on April 16, 2010, comprised of the Ontario Teachers’ Pension Plan and National Mortgage Guaranty Holdings Inc., acquired AIG United Guaranty Mortgage Insurance Company Canada. This transaction created the only Canadian-owned private mortgage insurance company, known as Canada Guaranty Mortgage Insurance Company (“Canada Guaranty”).

The introduction of Canada Guaranty will benefit lenders, mortgage professionals and consumers by fostering a competitive market dynamic and creating new choice among mortgage insurance providers. With a wide range of mortgage default insurance products for loans above 80% loan-to-value, as well as low loan-to-value products that assist our partners with capital and liquidity management, mortgage insurance from Canada Guaranty protects lenders and investors from losses related to borrower default and foreclosure.

National Underwriting Centre contact details

Toll Free: 1.877.244.8422
Toll Free Fax: 1.877.244.8448
E-mail: underwriting@canadaguaranty.ca

http://www.canadaguaranty.ca

Buyer’s Market

The basic definition of a buyer’s market is when more people want to sell than buy. There are a number of common factors that contribute to a buyer’s market. Excessive inventory in the market generally causes prices to drop which usually sparks a buyer’s market. Low interest rates intriguing buyers to purchase also adds fuel to the fire.

Switch or transfer

A switch or transfer of a mortgage is different than a mortgage refinance. When your mortgage runs out and it is up for renewal or you are looking to switch lenders at any point, as long as you don’t increase the size of the mortgage it is called a switch or transfer. When you start increasing the size of the mortgage, this now turns into what is typically known as a mortgage refinance. The biggest difference her is a refinance usually requires legal fee expenses around about $700 – $1200. When you are just switching or transferring the mortgage, there are no legal costs. Sometimes banks will offer to pay your legal costs but the interest rate is usually higher. In most circumstances, you are far better off paying the legal costs yourself. At the Jessi Johnson Mortgage Team, we are one of the only brokerages who will cover your legal costs on a refinance providing the lender approves of your deal.

Seller’s Market

The basic definition of a seller’s market is when more people want to buy than sell. Supply and demand are key factors in determining this equation. When there is less supply but more demand in real estate, you have a seller’s market.

Cap Rate

The Cap Rate is a ratio used to estimate the value of income-producing properties, which describes a return rate acceptable to an investor taking the risk of a capital investment. The basic calculation to figure out the Cap Rate is as follows:

NOI / Cost = Cap Rate

Net Operating Income (building rental revenue) / building cost to purchase or value = Cap rate

This essentially tells you how many years it will take to pay off the property using the revenue.

Rate hold

When shopping for a mortgage, whether it be a purchase or refinance, it’s a good idea to get a rate hold. A rate hold guarantees you a mortgage rate for 90-120 days (through a broker). This means that if interest rates increase, you are protected with a lower rate. If the interest rates decrease during the time of your shopping, you will automatically get the lower rate. The kicker here is you have to close on your mortgage before the end of your rate hold. As a mortgage broker, I can offer you up to 120 days for a rate hold which is double what many banks will offer you.

Stated income product (Alt-A program)

This program is designed for self-employed borrowers who are unable to provide traditional income verification but have a proven 2-year history of managing their credit and finances responsibly. Eligible borrowers typically own a small size business for a minimum of two years, which can be confirmed via a third-party arms length document. In addition, the borrower is required to declare their annual income, which should be reasonable based on the industry, length of operation and type of business.

Acceptable loan purpose:

• Purchase, Purchase Plus Improvements
• Progress Advance
• Refinance for repayment of existing mortgage debt, home renovations, debt consolidation, or asset enhancement
  • Equity takeout limited to $200,000
  • Where the loan purpose is to consolidate existing first and second mortgages, the maximum LTV will apply

Loan-to-value ratio limits:

• Purchase, Progress Advance: 90% LTV
• Refinance: 85% LTV

Eligible properties:

• Maximum 2 units where at least 1 unit must be occupied as the principal residence
• Existing and new construction
• Readily marketable residential dwellings, located in markets with demonstrated ongoing re-sale demand
• Older homes (pre 1950) must have been substantially modernized and the estimated remaining property (economic) life must be at least 25 years
• New construction must be covered by a lender -approved New Home Warranty Program

Maximum Loan Amounts:

• Metro Toronto, Metro Calgary & Metro Vancouver: $750,000
• Rest of Canada: $600,000

Note: Exceptions to these maximums will be considered on a case-by-case basis

Terms:

• Fixed, standard variable, capped variable and adjustable rate mortgages are permitted

Amortization options:

• LTV > 80%: Up to 35 years
• LTV ≤ 80%: Up to 40 years

Premium rates:

• Premiums must be paid in full at closing, and may be capitalized into the mortgage balance.
• Where the first and second mortgages are insured concurrently, the total premium will be equal to the amount that would be required if insured as a single first mortgage

Premium matrix:

LTV Ratio	Recommended Credit Scores	Purchase	Refinance	Top-Up Premium
85.01% – 90%	650	4.75%	N/A	7.00%
80.01% – 85%	620	2.90%	2.90%	5.50%
75.01% – 80%	620	1.64%	1.64%	3.85%
65.01% – 75%	620	1.00%	1.00%	2.60%
< 65%	620	0.80%	0.80%	1.50%
* A .20% premium surcharge will be applied for every 5 years of amortization beyond the traditional 25 – year mortgage amortization period

Borrower qualification:

• The income reported by the borrower must be reasonable based on the industry, length of operation and type of business
• Strong credit and credit score with minimum 2 trade lines with at least two (2) years history (for recommended bureau score requirements see the premium matrix below)
• Genworth will average the scores pulled from both credit bureaus for each borrower, and the minimum score requirement will apply to all borrowers on the application
• No mortgage, installment or revolving credit delinquencies appearing on the credit bureau in the past 12 months
• No reported defaults on residential mortgages for the past 7 years
• No previous bankruptcy
• Minimum 5% down payment from the borrowers own savings. The remainder may be gifted from an immediate family member. Borrowed down payments are not permitted.
• Borrowers with commission income are ineligible
• Lender to ensure borrower(s) have no tax arrears
• Maximum one (1) Genworth-insured Alt. A mortgage
• GDS/TDS Guidelines:

  Credit Score	GDS	TDS
  <680	35%	42%
  680+	No limit	44%

Self employed borrowers:

• One (1) form of written third party documentation confirming self-employment tenure for at least two (2) years must be on file
• Lender is required to capture the borrower’s “Stated” income and submit to Genworth as part of the application.
• The “Stated” income should be reasonable based on the type and size of the business, and should be able to service the required mortgage as per the GDS/TDS Guidelines above
• Reasonableness of the borrower receiving this income is a critical factor in the approval of the loan as is the borrower’s ability to service the loan and all other obligations

Documentation/information requirements:

Sole Proprietorship
• A one-owner operation where the owner directs all the activities of the business, assumes all authorities and obligations, and is liable for its business debts. The sole proprietor income is reported to revenue Canada on the standard tax return (T1 General) together with Revenue Canada’s required statement of business or professional activities.
• Documentation requirements - Any one of the following must confirm at least two (2) years business-for-self tenure:
  • Business License
  • GST/HST Return Summary
  • T1 Generals with statement of business activities attached for a minimum 2 years prepared by an arm’s length third-party
  • Audited Financial Statements for the last 2 years, prepared and signed by a CA
• Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears (Note: in the province of Quebec, both federal and provincial NOA’s will be required)

  Partnerships

• Partnerships are businesses owned by two or more individuals who share the profits or losses of the business operation. The partnership income is reported to Revenue Canada on the standard tax report (T1 General) together with Revenue Canada’s required statement of business or professional activities, which reflects the percentage of the NET income or loss for each partner of the enterprise.
• Documentation requirements – Any one of the following must confirm at least two (2) years business-for-self tenure:
  • Business License
  • GST/HST Return Summary
  • T1 Generals with statement of business activities attached for a minimum 2 years prepared by an arm’s length third-party
  • Audited Financial Statements for the last 2 years, prepared and signed by a CA
• Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears (Note: in the province of Quebec, both federal and provincial NOA’s will be required)

  Corporations

• A limited company or corporation is a legal entity, separate from the persons (all shareholders) who own it. The business can own assets, enter into contracts and conduct business transactions in its own capacity. The company is called limited because the liability of the shareholders is limited to their investment. All provincial Corporations must obtain articles of incorporation from the province in which they are registered or may be federally incorporated. The applicant’s personal income will be reported by T4 from the corporation.
• Documentation requirements – Any one of the following must confirm at least two (2) years business-for-self tenure:
  • Articles of incorporation
  • Audited Financial Statements for the last 2 years, prepared and signed by a CA
• Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears (Note: in the province of Quebec, both federal and provincial NOA’s will be required)

Portability:

• Mortgage default insurance is portable under the following conditions;
  1. When porting from an ALT. A to another ALT. A mortgage, the premium will be the lesser of:
     • The increase in the loan amount multiplied by the top-up premium rates defined in the table above, or
     • The new loan amount multiplied by the full premium rate
  2. When porting from an ALT. A loan to an existing standard Genworth insured loan, the premium will be the lesser of:
     • The increase in the loan amount multiplied by our standard premium top-up rates as described in our Portability feature Product Overview, or
     • The new loan amount multiplied by the full standard premium rate
  3. When porting from an existing standard Genworth insured loan to an ALT. A loan, the premium will be the lesser of:
     • The outstanding mortgage balance multiplied by 1.5% + the top-up amount multiplied by the top-up premium rate, or
     • The new loan amount multiplied by the full premium rate

Example for Scenario #3:

Outstanding mortgage balance = $100,000; Top-up mortgage amount = $80,000; New Loan Amount = $180,000 (90% LTV)

1. ($100,000 x 1.5%) + ($80,000 x 7.0%) = $7,100
2. ($180,000 x 4.75%) = $8,550

Premium Payable is $7,100

When porting with a top-up mortgage amount, the blended amortization option is available

Assumptions/assignments:

• Mortgages issued under this program may be assumed. We will continue to provide insurance coverage if the mortgage is sold to an investor, provided servicing continues with a Genworth approved lender in compliance with Master Policy terms.

Eligible Products:

• Second Mortgages
• Purchase Plus Improvements
• Cashout Refinance

Ineligible Products:

• New to Canada
• Family Plan
• Cashback Equity
• Vacation Homes (Type B)
• Secondary Homes (Type A)

Definition from Genworth Financial

Look-back

A look-back is like a rate hold but better. When a rate hold runs out, you are SOL. With a look-back, when you exceed your 90 or 120 days, the lender gives you the lowest rate 90 or 120 days back depending on the original look-back. We try to place all our clients in look-backs so that they have the most flexibility and options.

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Term	Rate
PRIME	3.00%
Variable	2.90%
1 Year	2.89%
3 Year	2.69%
4 Year	2.99%
5 Year	3.09%
10 Year	3.89%