A sophisticated investor is purchasing a $2 million investment property with $500,000 down. They have excellent credit and substantial assets. Which lending solution would be most appropriate?
Correct Answer
C) A conventional uninsured mortgage from a chartered bank
$500,000 on a $2,000,000 purchase is a 25% down payment. Mortgage loan insurance is typically needed only when the down payment is under 20%, and 20% is also the minimum down payment for a purchase of $1.5 million or more, so a strong borrower fits a conventional mortgage from a bank. Private and non-prime lenders charge more and suit borrowers who cannot qualify conventionally.
Why This Is the Correct Answer
A 25% down payment exceeds the 20% level below which mortgage loan insurance is typically required, and the borrower's strong profile means a bank will lend on conventional terms at competitive rates.
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A sophisticated investor is considering a collateral mortgage versus a conventional mortgage for a $750,000 property purchase. What is the primary advantage of a collateral mortgage for this borrower?
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An investor is financing a $2,000,000 purchase with 25% down through a private lender that is not federally regulated. OSFI's minimum qualifying rate (the stress test) for uninsured mortgages is a requirement on which lenders?