The Back Door to 100% Mortgages

Real Estate Agent with Remax Preferred Realty Ltd.

net,man, catch, moneyThe Canadian mortgage market has been free of the drama characterizing the US stage due its more conservative lending practices.   To save Canadians from the traps of no money down mortgages, the government banned both 100 percentage mortgages and 40 year terms "to reduce the risk of as US-style housing bubble in Canada."

Mortgage brokers, however, claim that the rules can easily be sidestepped. According to Innis mortgage broker Paula Siemens, borrowers have several ways around the new rules.

•·         They can use a non-Canadian bank. US Bank Wells Fargo makes 100% loans available to Canadians.

•·         They can borrow the down payment to comply with Canadian banking rules that allow loans up to 95% of the mortgage balance.  The loans might come from friends or family or lines of credit or cash advances from credit cards.

•·         They can use a cash-back mortgage offered by some banks. That gives the borrowers 5-7% back upon closing.  Those banks try to prevent borrowers from using the cash for down payments, but if a mortgage applicant raised the money from family and friends for the down payments and then later repaid his sources with his cash-back funds, the loan would still be in place.  The cash-back mortgage usually comes with a higher interest rate.

Banks resist no money down deals because the borrowers have less at stake if they fall on hard times.  Just because there are ways around the no money down ban does it mean this option makes good sense for most people, aside from possiby young professionals with high credit scores and large earning potential.

Stable, equity-backed loans are part of what has kept Canadian banks sound in comparison to their southern neighbors in need of bailouts.

For information about great places to live in Windsor, call your Prudential Select Real Estate Agent Mark Tesolin at (519) 972-5505 or visit

Margaret Mitchell
Coldwell Banker Yorke Realty - York, ME
Seacoast Maine & NH Real Estate

Hi Mark -I wish we had a bit of the Canadian market stability a little south of Cananda, here in Maine.   We are not as hard hit as some US markets but everyone is feeling the pain now a days.

Nov 20, 2008 10:54 PM
Richard Shuman
The Only B.S. I Have is from the University of Massachusetts - Lake Mary, FL
Real Estate Broker - Orlando Area - Love Referrals

the cash-back would be great if the bank put it in an escrow account which would allow the buyer to use if they need help with payments in the future!

Nov 20, 2008 11:08 PM