Self-Directed RRSP

Canadian tax regulations allow self -directed Registered Retirement Savings Plans (“RRSP”) / Registered Retirement Income Funds (“RRIF”) funds to be used for a non -arm’s length mortgage investment, provided that the mortgage is insured.

Acceptable Loan Purpose and Applicable Loan -to-Value Limits

Purchase Transactions:

• 95% LTV max 2 units
• Property value ≤ $500,000 –5% down payment required.
• Property value > $500,000 and < $1,500,000 –5% down payment required up to $500,000, with an additional 10% down payment on the portion of the home value above $500,000.
• 90% LTV max 4 units

Loan Security

• First and second mortgages

Eligible Properties

• Maximum 4 units where 1 unit properties must be owner occupied.
• 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.
• In addition, for 3 and 4 units, 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 in compliance with applicable bylaws and regulations.}

Maximum Property Value

• > 80% LTV: Property value must be less than $1,500,000
• ≤ 80% LTV: Property value must be less than $1,000,000

Qualifying Interest Rates and Terms

• 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 %. In the event a self-directed mortgage goes to claim, the maximum interest rate paid on the balance owing will be the lesser of the contract rate plus 2 %t or 5.25 %.

Amortization Options

• Up to 30-year amortization
• For greater than 25-year amortization LTV must be >80%, and one of the following applies.
  • A minimum of one applicant must meet first-time homebuyer’s criteria; OR
  • Purchase of a new constructed home.

Borrower Qualification

Income and Employment

• Standard income and employment verification requirements apply.

Credit

• >80% LTV: At least one applicant is required to have a minimum credit bureau score of 600.
• ≤ 80% LTV: At least one applicant should have a minimum recommended credit bureau score of 680.

Down Payment

• Qualified home buyers may use traditional down payment sources including personal savings, RRSP withdrawal, a non-repayable gift from an individual related to the borrower through a familial or legal relationship sweat equity, existing home equity, and proceeds from sale of property.
• Government grants may be considered if pre-approved by Sagen.

Additional Criteria

• The holder of the RRSP and the borrower must be the same person (or be the spouse of the borrower).

GDS / TDS Guidelines:

Documentation / Information Requirements

• Standard documentation requirements apply.
• Sagen may request that the Lender provide a copy of the required documentation on a case-by-case basis.
• For 3 and 4 unit properties 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.

Assumptions / Assignments

• Mortgage is assumable subject to meeting Lender guidelines.

Eligible Products *

• Second Mortgage Program
• Borrowed Down Payment Program
• Business for Self (Alt. A) Program
• Homebuyer 95 Program
• Family Plan Program
• Progress Advance Program
• Purchase Plus Improvement Program
• Vacation / Secondary Homes Program (Type A Properties)
• Investment Property Program

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

Ineligible Products

• New to Canada Program
• Vacation / Secondary Homes Program (Type B Properties)