Investment Property Program
Provides qualified borrowers with the opportunity to purchase an additional investment property with a minimum of 20% down.
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:
| LTV Ratio | Premium Rate | Top-Up Premium |
|---|---|---|
| Up to 65% | 1.45% | 3.15% |
| 65.01% - 75% | 2.00% | 3.45% |
| 75.01% - 80% | 2.90% | 4.30% |
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 50% of the gross rental income.
- Taxes and heat are to be excluded from the debt service calculation. Income to be validated using signed lease agreements or fair market rent from an appraisal.
- Lender is required to obtain a General Assignment of Rents and Leases.
- TDSR Calculation:
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
| GDS | TDS |
|---|---|
| 39% | 44% |
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
