Investment Property Program

Sagen’s Investment Property Program provides qualified borrowers an opportunity to purchase an investment property with as little as 20% down payment.

Acceptable Loan Purpose and Applicable Loan-to-Value Limits

Purchase Transactions

• 80% LTV

Loan Security

• First mortgages

Eligible Properties

• 2-4 units
• New construction covered by a Lender approved New Home Warranty Program*
• Existing resale properties
• Readily marketable residential dwellings, located in markets with demonstrated ongoing re-sale demand
• Estimated remaining economic life of the property should be a minimum of 25 years
• In addition, the property must meet the following criteria:
  • Municipal zoning
  • Fully self -contained units

_{*For new construction properties in the territories (Yukon, Northwest and Nunavut Territories) where New Home Warranty is not an option, Lenders must obtain either the occupancy permit or a third-party report from a qualified professional such as: an inspector, architect or engineer. The qualified professional must carry the appropriate liability insurance and confirm construction is completed in compliance with applicable bylaws and regulations.}

Ineligible Property Types

• 1-unit dwellings
• Time -share Interests
• Vacation Homes
• Commercial zoning
• Rooming Houses
• Quarter Share / Shared Ownership
• Rental Pools

Maximum Property Value

• Property value must be less than $1,000,000

Qualifying Terms and Interest Rates

• Fixed, standard variable, capped variable and adjustable rate mortgages are permitted.
• Maximum interest rate term of 25 years.
• The qualifying interest rate is the greater of the contract rate plus 2 % or 5.25 %

Amortization Options

• Up to 25 years

Premium Rate

The premium payable will be the lesser of the premium as a % of the total new loan amount or the premium as a % of the top -up portion on the additional loan amount (if existing insured) based on the rates below:

The mortgage insurance premium is non -refundable, paid at the time of closing and may be added onto the mortgage.

Borrower Qualification

Income and Employment

• Standard income and employment verification requirements apply.

Credit

• Borrowers should have a strong history of managing their credit
• Minimum credit bureau score of 680 is recommended.
• Two (2) trade lines with at least two (2) years history
• No prior bankruptcy
• Sagen will consider applications with lower scores based on the overall merit of the application and where other risk mitigating factors exist.

Down Payment

• Must be from own resources and may include personal savings, RRSP withdrawal, existing home equity, proceeds from sale of property.

Rental Income

• Sagen will accept 100% of the rental income subject to:
  • Each applicant having a minimum credit score of 680.
  • Income to be validated using signed lease agreements or fair market rent from an appraisal.
  • Where rental income is confirmed via fair market rent from an appraisal Lenders should apply a market vacancy rate in accordance with their internal policy.
• If the above credit and income requirements cannot be met, 50% of rental income is to be used for qualification.
• Taxes and heat are to remain excluded from the debt service ratio calculation.
• Total Debt Service Ratio (TDSR) Calculation:

TDSR=\frac{Principal\, + \,Interest\, + \,50\%\,Condo\,Fees\,(if\,applicable)\,+\,Other\,Debts}{Gross\,Annual\,Income\,+\,\%\,of\,Gross\,Rents}

Additional Criteria

• Personal guarantees are required when the borrower is not an individual (e.g.,corporate entity).
• The personal guarantee cannot be released without prior consent from Sagen.

GDS / TDS Guidelines

Documentation Requirements

• Standard documentation requirements apply.
• Sagen may request that the Lender provide a copy of the required documentation on a case-by- case basis.
• Sagen requires that the Lender obtains a General Assignment of Rents and Leases or include this requirement in the Standard Charge Terms.

Portability

• Sagen mortgage insurance is portable, so home buyers can take advantage of a Lender’s portability plan. For further details, refer to the Portability Feature product overview.
• When porting from an existing standard Sagen insured loan to an Investment Property loan, the premium will be the lesser of:
  • The outstanding mortgage balance multiplied by 0.50% + the top-up amount multiplied by the top-up premium rate, or
  • The new loan amount multiplied by the full premium rate.

Assumptions / Assignments

• Mortgage is assumable subject to meeting Lender guidelines.

Eligible Products*

• Purchase Plus Improvement Program

*For specific underwriting guidelines related to the above eligible products, please refer to the applicable product overview.

Ineligible Products

• Business for Self (Alt. A) Program
• Borrowed Down Payment Program
• Family Plan Program
• Homebuyer 95 Program
• New to Canada Program
• Progress Advance Program
• Vacation / Secondary Homes Program
• Second Mortgage Program