Equity (low documentation) and vision (damaged credit) mortgages became more difficult to obtain in Canada this week as Concentra financial announced that it was "temporarily" suspending these programs in response to the current conditions of the economy and credit conditions in Canada.
These types of programs are very important to customers who don't fit the traditional "A" lending requirements of most banks and institutions.
Equity programs allow for reduced amount of required documentation in underwriting a mortgage. Over the past few years, lenders have been willing to allow for less documentation in situations where there is sizable amount of equity (security) in a property. The thoughts behind this are that a person is going to be much less likely to walk away from their mortgage if they have a sizable amount of equity in the property. These programs are normally reserved for customers with very high credit score, but still allow for the best broker rates available in the industry.
Vision programs are also heavily based on sizable downpayment or equity in a property as well. These programs however are directed towards customers who have had credit problems in the past. Because the lender does not have a positive indicator as far as credit goes, the rates offered are normally higher in these cases. The thoughts behind these programs are that they offer customers a chance to renew a mortgage or begin to get back on the right track. There are many reasons for a person to experience credit problems and in many cases, it's not because the customer can not be counted on or is irresponsible with debt. Business failure, divorce, health problems and job loss are all reasons that a customer may go through a period of financial difficulty. It is important that programs exist to help a person re-establish their credit and work towards financial strength.
A Vision loan program in some cases may even allow a person to get out of a difficult financial situation without having to go through bankruptcy, which can seriously hamper future lending opportunities.
As an independent mortgage broker, All Source Mortgages has access to many lenders and the full realm of products. I still have access to various Equity and Vision programs through other lenders. I am able to provide assistance with any type of mortgage situation and always happy to offer a second opinion.
For more information on either of these mortgage programs or mortgage solutions in general, please feel free to contact me!
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