TD's move to raise the LTV ceiling on its rental program goes only so far, say brokers, pointing to rental income calculations that will continue to limit client access.
Mortgage professionals welcomed the bank’s announcement Tuesday that it is bumping up the maximum rental LTV from 65 per cent to 75 per cent, but said the move doesn’t go far enough.
“Yes, TD is making more money available by raising the LTV maximum,” said Lucy Melino, a broker with Your Mortgage Connection. “But borrowers should keep in mind that TD, just like many A lenders, take into account only 50 per cent of a rental property’s potential income when deciding who qualifies for a loan.”
Still, with TD bumping up its rental LTV maximum, Melino said, borrowers no longer need to put up 35 per cent for a rental property, although the 50 per cent income limits how much they qualify for.
In an email to brokers Tuesday night, TD said that effective October 31 it will raise its maximum LTV on rental properties to 75 per cent but maintain a 50 per cent rental income.
By contrast, some B lenders have already migrated back to offering an 80 per cent rental offset in order to win more deals in an increasingly tight yet competitive market.
Other requirements put a damper on the announcement, she said.
“Another sticking point is that the 75 per cent LTV max is only available to properties with a lease in place,” she said. “Without a lease, TD will have to use a market rent assessment to qualify the loan and a borrower can only get a 65 per cent maximum LTV.”
Under the new changes, self-employed borrowers also must have their mortgages insured if they are seeking an LTV above 65 per cent, Melino said.
“That’s a big concern,” the broker said. “People will still get approved, but this means it will become more difficult to do so.”