B2B Bank is the latest lender to drop the LTV ceiling on its HELOCs in keeping with OSFI guidelines, but the lender has left the door open for brokers seeking up to 80 per cent LTV for their clients.
“Effective Oct. 12, our maximum LTV ratio on HELOC will go down from 80 per cent to 65 per cent,” said Christine Zalzal, vice president for marketing at B2B. “We are doing this in accordance with OSFI regulations.”
Earlier this week, B2B sent out an email to brokers detailing those and other changes forced by the guideline changes.
Brokers who submit credit applications with an LTV greater than 65 per cent on a HELOC, have to submit all underwriting documents by October 18 in order to avoid having their clients complete a new application based on the new maximum limits, according to the bulletin sent out by Gary Wilhelm, vice president of credit for B2B
The bulletin also mentioned how brokers can help clients obtain an LTV up to 80 per cent even under the new rules.
“If your client has a Homeowner’s Kit and wants additional financing, up to an LTV of 80 per cent, they can amortize up to 15 per cent of the mortgage portion,” said Wilhelm. “A Homeowner’s Kit allows borrowers to have a revolving HELOC portion of 65 per cent and an amortizing mortgage of 15 per cent.”
After Oct. 12, cashbacks will also no longer be eligible for use towards a down payment, according to Wilhelm.
“For credit applications submitted by Oct. 12, the 5 per cent cash back refunded as part of the Cash Back program and applied as down payment will be authorized at the time of disbursement,” he told brokers. “Your client must provide proof of down payment for all applications.”