Traditional Mortgage Financing
Traditional mortgage financing through chartered banks or monoline institutions involves
obtaining a loan to purchase a home or property or refinance and transfer a mortgage on an
existing one. Chartered banks are well-known financial institutions that offer a wide range of
banking services, including mortgage loans. On the other hand, monoline institutions specialize solely in providing mortgage products and do not offer other banking services.
When applying for a mortgage with a chartered bank or monoline institution, borrowers typically go through a similar process. They need to provide detailed financial information, such as income, credit history, assets, and debts, to assess their eligibility for a mortgage loan. The lender will then review this information to determine the loan amount, interest rate, and other terms they can offer to the borrower.
Traditional mortgage financing usually requires a down payment, which is a percentage of the property’s purchase price that the borrower must pay upfront or an equity on existing ones. The size of the down payment can vary based on factors such as the type of mortgage, the borrower’s creditworthiness, and government regulations.
Once the mortgage is approved, the borrower makes regular payments to the lender, which typically include both the principal amount borrowed and the interest accrued. The loan is secured by the property itself, meaning that if the borrower fails to make payments, the lender has the right to foreclose on the property to recoup their investment.
Overall, traditional mortgage financing through chartered banks or monoline institutions provides borrowers with access to funding for purchasing a home or refinancing their current one while allowing them to spread out the cost over time through regular payments. It is essential for borrowers to carefully review and understand the terms of the mortgage before committing to ensure they can meet their financial obligations.
Under Traditional Mortgage Financing:
- 1- Purchase Plus Improvement:
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- This program allows for qualified homebuyers who want to make cosmetic improvements to their newly purchased property within 120 days of taking possession (basement finishing, bathroom fixtures, kitchen cabinets/counters, flooring, new windows, detached garage).
- The ‘as-improved’ value is used to determine the maximum loan amount, subject to loan-to-value (LTV) limitations. - 2- Total Net Worth Program:
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- This program is designed to provide additional mortgage solutions to customers with moderate incomes who have a significant amount of verifiable liquid assets and strong credit scores.
- They must be Canadian Citizens claiming taxes in Canada
- Minimum liquid assets of $150,000 in accounts such as GIC, TFSA, Mutual Funds, Chequing, etc. - 3- Buisness for Self Program:
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- This program provides additional mortgage solutions to customers with moderate personal incomes who also have income in their operating companies.
- They must be Permanent Canadian Residence paying taxes in Canada.
- Business must be Canadian registered and pay Canadian taxes
- Customers with incorporated companies only.
- All the shareholders of the company must be on the mortgage.
- To use percentage of the companies income on top of the personal income of the applicant, the business must be 100% owned by the borrower(s) on the application - 4- Projected Income for Physicians, Dentists, Veterinarians, and Optometrists Program:
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- A program that allows borrower qualification to be based on the use of future (projected) income for medical professionals who are in the process of completing or have recently completed their residency/fellowship.
- 5- Non-resident Program:
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- This program provides financing to residents of other countries seeking to purchase a secondary/ vacation home in Canada.
- 6- New Comer/Immigrant Program:
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- is a residential mortgage financing program for the purchase of owner-occupied properties for eligible new permanent residents
- 7- Temporary Residents Program:
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- is a residential mortgage financing program for purchase of owner-occupied properties for temporary foreign workers and experience class students working in Canada with a valid Work Permit (IMM 1442) or exemption. Conditions apply and may be amended from time to time.
The typical client for the Temporary Resident program is someone who has established work history in Canada through contract work, post-graduate studies, or relocation programs and who is looking to purchase a principal residence.
