Self-Directed RRSP
Allows self-directed RRSP/RRIF funds to be used for non-arm’s length mortgage investments.
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.
- Estimated remaining economic life of the property should be a minimum of 25 years.
- 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:
GDS | TDS |
---|---|
39% | 44% |
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
Ineligible Products
- New to Canada Program
- Vacation / Secondary Homes Program (Type B Properties)