Vacation/Secondary Homes

The Vacation / Secondary Home Program allows borrowers to purchase a second home with an affordable monthly payment with 5% down payment.

Acceptable Loan Purpose and Applicable Loan-to-Value Limits

Purchase Transactions

Secondary Homes (Type A)

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

Vacation Homes (Type B)

• 90% LTV

Loan Security

Secondary Homes (Type A)

• First and Second Mortgages

Vacation Homes (Type B)

• First Mortgages

Eligible Properties

Secondary Homes (Type A)

• Maximum 1 unit
• Property must be owner occupied or occupied by an immediate family member
• 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

_{*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.}

Vacation Homes (Type B)

• Property characteristics same as Type A properties noted above except for the following:
  • Property need not be winterized
  • Seasonal access permitted (road not ploughed during winter)

Ineligible Properties (For both Type A and Type B homes)

• Investment properties
• Rental pool / Timeshare properties

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 30-year amortization
• For greater than 25-year amortization, refer to 30-year amortization eligibility criteria.

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.

If porting the mortgage insurance premium from a Type A property to a Type B property, the difference in premium is 1.10%. This difference is charged on the mortgage balance being ported, in addition to the top-up premium on the additional loan amount.

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

• No prior bankruptcy or judgments.
• No R3’s in the last 24months.

Type A properties

• >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.

Type B Properties

• Minimum credit bureau score of 680 is required for all applicants.
• Please note that on a case -by-case basis, Sagen will review instances where the primary applicant meets the minimum credit score but a second applicant has no credit at all.

Down Payment

Type A Properties

• 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.

Type B Properties

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

Additional Criteria

• Maximum of one Sagen insured vacation property per applicant.
• No 3rd party guarantors for qualification purposes. Spousal guarantors are permitted
• An immediate family member is defined as a father, mother, child, brother, sister, grandparent, legal guardian, or legal dependent.

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.

Property Type Requirements

Secondary Home (Type A)

• Foundation must be permanent and installed beyond the frost line. This includes concrete / concrete block or preserved wood foundations, or post / pier foundations on solid bedrock.
• Must be zoned and used as residential, rural, or seasonal. Mixed uses or rental pooling is not accepted.
• Property tenure must be freehold or condominium.
• Co-ops or interest ownership is not accepted.
• At minimum, property must have a kitchen, 3-piece bathroom, bedroom, and common area.
• Remaining economic life must be 25 years.
• Year-round road access on reasonable quality public roads, serviced by the local municipality.
• Privately serviced roads are allowed, provided there is a maintenance contract in place.
• Property must be winterized with a permanent heat source. For example, heating can be baseboard, forced air, water radiator, radiant, coal, propane, geothermal heat pumps, or heat pumps.
• Good quality construction with no signs of deferred maintenance.
• Water source: well, municipal serviced, and cistern. Water source must be drinkable. Lake or river water is acceptable, provided the property has its own filtration system. For example, a reverse osmosis system.
• Property must have electrical power. Alternative energy sources may be considered on a case-by-case basis such as solar power, wind energy and generators.
• There must be good market appeal in the area with no adverse influences / neighborhood nuisances.

Vacation Home (Type B)

All Type A property requirements apply to Type B, except for the following:

• No permanent heat source is required. For example, a wood stove, fireplace, stove or heat blower is acceptable.
• Foundation may be floating. For example, sitting on blocks.
• Seasonal road use is acceptable. This means the road does not have to be ploughed during the winter.
• Water source needn’t be drinkable. However, there must be running water in the home.
• Property may be accessible only by boat.
• Holding tanks may be considered provided it is common for the immediate area and meets all municipal/provincial requirements (e.g., CSA approved holding tank).

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 a Vacation (Type B) loan, the premium will be the lesser of:
  • The outstanding mortgage balance multiplied 1.10% + 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 *

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

Ineligible Products