New Self Employed Policy Changes-Effective April 9th 2010

Hello and Welcome to my Blog of the day,

So here we have it again, yet another policy change and this time it is touching on Self Employed Commission People. Starting April 9th 2010.

Purchases and Portability Transactions:

-Maximum Loan to Value is reduced from 95% LTV to 90% LTV.
-For refinances the maximum LTV is being reduced to 85% LTV from 90% LTV.

The Self Employed Program is for borrowers who are unable to provide 3rd party verification of the Self Employed income. This applies to borrowers who have recently become self-employed.

Self Employed borrowers who have been in the same line of business for more the 3yrs will not be eligible for the Self Employed stated income program.

CMHC requires a min of 2 yrs experience in the same line of business.
This can include time spent as a non-self employed worker in the same line of business.

Borrowers with commission income will no longer be eligible for the Stated income program without 3rd party verification. Proof of commission income becomes easily sustained.

Qualifying for a mortgage after April 19th 2010.

The “qualifying rate” changes ONLY apply to mortgages greater than 80% LTV CMHC insured. ***However the lenders may at their discretion apply the same qualifying rate policy across the board. (insured and conventional mortgages).***


Fixed-Rate & Variable-Rate Mortgages
For loans with a fixed-rate term of less than five years and for all variable-rate mortgages, regardless of the term, the qualifying interest rate is the greater of:
• The benchmark rate
• The contract interest rate
For loans with a fixed-rate term of five years or more, the qualifying interest rate is:
• The contract interest rate
Mortgages with Multiple Interest Rates (eg, Multi-Component Mortgages)
Each component must be qualified using the applicable criteria defined above.

CMHC defines the benchmark rate as the Chartered Bank – Conventional Mortgage Five-Year rate that is the most recent interest rate published by the Bank of Canada in the series V121764 as of 12:01am (ET) each Monday, which can be found at: http://click.icptrack.com/icp/relay.php?r=17446506&msgid=299036&act=7A4V&c=191858&destination=http%3A%2F%2Fwww.bankofcanada.ca%2Fen%2Frates%2Finterest-look.htmlwww.bankofcanada.ca/en/rates/interest-look.html