Borrowing outside the box: tips for homebuyers with specialized mortgage needs

Getting a mortgage is a straightforward process for many people. However, there are certain buyers whose specific circumstances require a specialized mortgage product.

Kristi Hyson, mortgage associate with Axiom Mortgage Solutions, says some brokers primarily do basic mortgages, so if your needs "don't fit in that box" they might not have a ready solution.

"You really have to talk to your mortgage professional to see if they understand your situation and can provide solutions," she said.

Here is Hyson's advice for buyers in a variety of mortgage situations:

First-time buyers
Hyson says your mortgage professional can explain the government programs available for first-time buyers, such as the new First-Time Home Buyer Incentive that comes into effect in September.

They can also unpack the pros and cons of options like withdrawing from RRSPs or Tax-Free Savings Accounts for a down payment.

However, she says there could be additional factors to consider, such as if a parent or grandparent wants to provide a "living inheritance" to help a family member with a down payment for their first home.

Second property
Hyson says if you want to buy an investment property, you need at least a 20 per cent down payment.

"You really have to talk to your mortgage professional to see if they understand your situation and can provide solutions." - Kristi Hyson, Axiom Mortgage Solutions

On the other hand, if you're looking for a vacation home, or perhaps a condo for your university-bound child to live in while attending school somewhere, the purchase process can be much like buying a primary residence.

"As long as it's not an income-generating property, and the clients can qualify, they can buy that property for as little as five per cent down," said Hyson.

Reverse mortgages
Hyson says homeowners age 55 and over can access up to 55 per cent of their home's value through a reverse mortgage.

She says since it is an equity-based mortgage, there are no debt-service requirements to be met, so it's ideal for someone who doesn't have a lot of savings but does have plenty of equity in their home.

"They remain homeowners of their property, and they can live in it until the last person is deceased, and then it becomes the estate's," she said.

Self-employed
Hyson says with self-employed clients, she really gets to know their situation before she starts looking for a suitable mortgage.

"I sometimes have to call around the various lenders and (on behalf of the client) say, 'Here's my income, here's my credit and here's my story.' I speak to the business development manager and say, 'Is this something that will align with the type of mortgages that you would approve?' " she said.

Hyson says the client will have to provide documentation to prove their financial means, but "if the story makes sense, and the lender can see that it makes sense, nine times out of ten they're going to help out."

Line of credit
Hyson says if someone is looking to buy a second or even third home and has equity in their existing real estate, they can use a portion of that equity to secure a line of credit and finance the purchase of another property.

She adds there is also the option of hybrid financing that combines a line of credit with a partial mortgage.