THE INTEREST-ONLY FLE - Merix Financial
[Pages:3]THE INTEREST-ONLY FLE
THE INTEREST-ONLY FLEX MORTGAGE - FAQ'S
Q: How many components are allowed on the Interest-Only Flex Mortgage? A: This product can have a maximum of two components
1: Interest-only component 2: Principal and Interest (P&I)
Q: Can a client select just a single component? A: Yes; however, for a single component it must be interest-only (Fixed or ARM).
Q: What portion can be interest-only payments? A: The minimum interest-only component must be no less than 50% of the loan amount.
The interest-only portion cannot exceed 65% LTV.
Q: What are the product combinations allowed? A: ARM rate interest-only + Fixed amortizing component
ARM rate interest-only + ARM amortizing component Fixed rate interest-only + Fixed amortizing component Fixed rate interest-only + ARM amortizing component ARM rate interest-only (stand-alone component) Fixed rate interest-only (stand-alone component)
Q: On what rate does the client qualify? A: Both components of this product will be qualified using the higher of the BOC benchmark rate or
contract + 2.00%. You can use a qualifying amortization of 30 years for the interest-only portion and respective amortization selected on the amortizing portion (both components qualify on Principal and Interest payments).
Q: What is the minimum amount and amortization required for a sub-component? A: The minimum amount for a sub-component is $15,000.
The minimum amortization for a sub-component is 18 years.
Q: What is the maximum LTV allowed? A: This is based on a sliding scale and we have created an easy-to-use calculator to quickly determine
this for you ? click here to download our calculator. If you are unsure of your property's location for the purposes of the sliding scale, please use the Canada Post Look-Up.
Q: Can the client choose whatever payment frequency they like? A: Yes, they can choose between weekly, bi-weekly, semi-monthly or monthly. If they have an
amortizing component, then any frequency other than monthly on the interest-only component must line up with the amortizing payment frequency.
Q: Is there a limit to how much equity a client can take out when refinancing? A: No, there is no limit.
?MERIX Financial. Subject to change at any time without prior notice
THE INTEREST-ONLY FLE
THE INTEREST-ONLY FLEX MORTGAGE - FAQ'S
Q: How should the deal be submitted? A: Under Loan Type, select "Mortgage", input a 5-year term and 30-year amortization, and choose
"Interest-Only" for under the qualifying details. Be sure to then notify the split amount in your deal notes. For a simple step-by-step guide on how to submit, click here.
Q: If the customer has two components (interest-only and P&I), can they have the payments come out together?
A: Yes. Payments can be lined up so they are taken on the same day. However, it is up to the client's bank itself if payment for both components will be taken out just once (combined) or if it will show as two separate transactions on the same day.
Q: What will the client's statements look like? A: All existing customer statements (such as the Information Statement, Prepayment Statement,
Amortization Schedule, Account Transaction History) will apply to each individual component of the Interest-Only Flex Mortgage. For example, the Information Statement will be generated for each component (if the deal has both an interest-only and a P&I portion).
Q: Can the client convert their components on the Interest-Only Flex? A: Yes. Two types of conversions are allowed:
1) The client can convert the interest-only loan into an amortizing loan. The total interest-only portion must be converted; no partial conversions are permitted. The new amortizing loan will have an amortization period no greater than 30 years, less the time that has passed.
2) The client can convert their interest-only or amortizing ARM rate into an amortizing Fixed rate with a term equal to or longer than the remaining term. The total ARM portion must be converted, no partial conversions are permitted.
Conversions to an amortizing loan will be done at prevailing posted rates. If the client has multiple components, the maturity dates, it is not a requirement to have the maturity dates line-up.
Q: What is the penalty charged to the client if they payout early? A: For interest-only Fixed portion:
? Entire Term; If paid out in full, greater of 3 months of interest or IRD on the balance outstanding. If prepaid (but not in full), greater of 3 months of interest or IRD on the amount of funds that exceeds prepayment privilege allowed
For interest-only ARM portion: ? First 2 years; If paid out in full, 1.515% on the balance outstanding. If prepaid (but not in full), 1.515% on amount of funds that exceeds prepayment privilege allowed ? After 2 years; Fully open, no penalty
For Amortized portion (Fixed): ? Penalty is the greater of either: IRD (Interest Rate Differential) or 3 months of interest
For Amortized portion (ARM): ? Penalty is 3 months of interest
?MERIX Financial. Subject to change at any time without prior notice
THE INTEREST-ONLY FLE
THE INTEREST-ONLY FLEX MORTGAGE - FAQ'S
Q: How is the Interest-Only Flex Mortgage registered? A: The mortgage is registered as a collateral charge for the loan amount value at Prime + 20%. While
the client can have multi-components with this product (interest-only and amortizing), only one charge will be registered on title. The Interest-Only Flex Mortgage is a demand loan. In the event of a default under this agreement, we may decide that all amounts of principal, interest, fees, charges, and other amounts owed with respect to the loan immediately become due and payable on demand.
Q: Is the Interest-Only Flex portable? A: If you have a firm agreement for the purchase of a new property, you may transfer the remaining
balance of the loan to your new property without penalty, or you may combine the remaining balance of the loan with additional funds to purchase the property. You and the new property must be requalified and satisfy our underwriting guidelines. You have up to 30 days to port your mortgage after the sale of the existing property.
Q: What is the broker commission on the Interest-Only Flex? A: Commission is paid based on a 5-year term. Please see the current MERIX and Lendwise
compensation guides for details.
Q: Are buy downs allowed? A: Standard buy down policies apply to the amortizing component, but there are no buy downs allowed
for the interest-only component. To determine the blended rate of the two components, download our APR calculator here.
Q: Is an appraisal required? A: Appraisal are required on all applications for the Interest-Only Flex mortgage. Appraisals must be
ordered through NAS or RPS.
Q: Are rentals that are in a company name allowed? A: Rentals in a holding company name (not an operating company) are permitted for amortizing only.
Personal guarantees are required and must cover 100% of the mortgage loan. Articles of incorporation, borrowing resolution or borrowing by-law will also be required.
For more information, please see the following:
? Client Suitability ? click to find out the benefits of this product and who this product might be best suited for.
? How to Submit ? click for submission tips and a detailed step-by-step illustration on how to submit an Interest-Only Flex ? Product Specifications ? click to find out the policy guidelines for this product offering. ? Interest-Only Flex Calculator ? click to download this Excel calculator and find out LTV, mortgage amounts, split
allowances, and to determine the best product mix to best suit your client's needs.
?MERIX Financial. Subject to change at any time without prior notice
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