Perhaps wanting to win back the hearts of many Canadians after pulling out of their discounted mortgages early, TD Canada Trust has come out with yet another announcement – it will still loan to stated income borrowers! The news comes one week after CIBC said that their stated income mortgages will no longer be on the bargaining table.
Stated income mortgages are important, and they help many people get a mortgage that otherwise wouldn’t be able to. With a stated income mortgage, a person simply has to tell a their lender what their income is, they don’t need to be able to prove it like they would with a conventional mortgage. This was especially helpful to those who are self-employed and don’t have pay stubs or an employer that can verify what they’re saying; and it also helps new immigrants, who might have earned most of their income outside of the country and therefore, are having a hard time verifying it. Now, it’s important to understand that it’s only the FirstLine branch of CIBC that’s no longer offering stated income mortgages. That would be the branch that’s most closely linked to mortgage brokers. While CIBC will still offer stated income mortgages at their branches and through their road reps, it’s the brokers, and those broker’s customers, that are most likely going to feel the pinch.
But enough about CIBC, on with TD Bank!
TD has said that unlike CIBC, they will still be offering stated income mortgages – to their Toronto mortgage brokers, to their customers, everyone’s included! However, there are some new standards imposed on those stated income mortgages, and they’re only in place so that the bank can continue to adhere to new strict anti-money laundering laws. Those changes however, now include:
- As of February 7, the TD credit centre will be performing an Income Reasonability Assessment on all stated income mortgages.
- All applicants are now required to have a 40% total debt service ratio
- While new immigrants are welcome to apply at TD for their mortgage, the bank does now require that if they cannot verify their income, they need to be able to show that they have at least 50% of the mortgage amount in Canadian assets.
- And, while TD Canada Trust wants to make it very clear that they are still very much in the equity business, they now have a cap of 65% – 75% on any refinancing loans.
After yesterday’s news of many of the banks (including TD) pulling out of their discounted mortgage deals early, does this rebuild your faith that the banks aren’t just a bunch of followers? And that sometimes, one of them will stand up and do things a little differently for the consumer, even if it’s not what the neighbouring bank is doing?
