Genwoth Financial Canada, one of Canada’s two mortgage default insurers offers its clients a program to keep them in their homes during difficult times. Please read the article below for more information. Every investment has a certain risk factor, and buying a home is no different. Economic downturn, illness, job loss or a death in the family can all lead to financial difficulties and the risk of mortgage default.

How can you minimize the risk?

Buy what you can afford

Make sure you buy a home that you can afford. Home buyers need to be realistic about their housing budgets. The size of the mortgage you obtain, the interest rate and the amortization period will directly impact your monthly mortgage payments. As a general rule, your mortgage payments and property taxes should not exceed 25 per cent to 30 per cent of your pre-tax income. When budgeting, plan for other home-related costs such as utilities, insurance, maintenance, and taxes. Mortgage planning tools are available online to help Canadians manage their loans.

Look for the best mortgage options

Find out who is offering the best mortgage terms and interest. If you understand the various rates and terms available you can determine the option that works best for your needs. Understand the implications of variable versus fixed interest rates.

Build a monthly housing budget

Do you know where your money goes on a monthly basis? Once you are in your home, you should develop a budget to track your expenses, including all home-related items such as utilities, property insurance, taxes and a reserve for maintenance. Make sure to leave some room for unexpected expenses.

Insurance options

Think about protecting your investment. In addition to basic home/fire and title insurance, there are life insurance and mortgage life insurance options available so that the loss of a loved one doesn’t create financial instability. Some organizations also offer mortgage insurance for disability, critical illness or loss of employment. The cost of these options should be included in your debt servicing calculations.

In the event you encounter financial hardship during the life of your mortgage, Genworth Financial Canada (formerly GE Mortgage Insurance Canada) has a proven default management program to help provide temporary financial assistance for qualifying borrowers. To access this program, consumers should contact their lending institution immediately and ask about Genworth’s Default Management program.

Getting a mortgage to buy a home for self-employed workers and those who work strictly on commission poses particular challenges.

In a survey of self-employment, Statistics Canada reports that nearly one worker out of six in Canada in 2000 was self-employed and most of these became, and remained, self-employed by choice.

Self-employed borrowers and commission sales people normally do not have the same income stability that regular salaried workers in Canada have. This segment of the Canadian labor force can apply for a regular mortgage to finance or refinance a home but the process is onerous and typically may result in higher interest rates.

Genworth Financial Canada has developed a specialized mortgage insurance program, available through financial lenders and mortgage brokers, to help self-employed and wholly commissioned workers receive a high, loan-to-value mortgage at regular interest rates, quickly and easily, to either purchase or refinance a home.

Who qualifies

Self-employed persons must prove they have been in self-employment for at least three years by supplying at least two forms of written, third party documentation such as a business credit report, business license, GST tax returns or articles of incorporation, or advertising material.

Self-employed applicants do not need to disclose the nature of their business but must show a strong credit rating with no mortgage, installment or revolving credit delinquencies and no reported defaults on residential mortgages in the past seven years.

Commission sales applicants are defined as someone who receives 100 per cent of their income from commissions.

Commissioned applicants must supply one form of written third party documentation through letters of employment, T4 or income tax returns (T1 General) showing at least two years of commission sales income as defined above.

What qualifies

The program will fund up to 90 per cent of the purchase price or 85 per cent of an existing property for refinance purposes, to a maximum loan amount of approximately $450,000.

Eligible properties include existing and new construction properties with a maximum of two units where at least one unit is occupied as the principal residence.

To qualify, all applicants must occupy the property. Spousal guarantees are also acceptable provided they occupy the property.