Effort Trust Mortgage Review: Rates, Lending Guidelines and Who They Suit

Effort Trust Mortgage Review: Programs & Lending Guidelines

How Effort Trust's lending guidelines read from the broker side — the programs on the shelf, how income is qualified, credit floors, terms and where they lend. Consumer-facing policy only: broker submission mechanics and compensation are out of scope, and guidelines change, so confirm anything you are planning around with the lender or a licensed broker.

Effort Trust's Mortgage Offering — Residential

Effort Trust is a Hamilton-based trust company lending across southern Ontario, and it sits between the banks and the private market — more flexible than a bank on credit and amortization, more structured than a private lender.

Conventional mortgages on purchases and refinances of detached homes, semi-detached homes, condominium apartments, townhouses and freehold condominiums, to 75% of value on most files.

Insured mortgages through a single insurer, which opens the door to higher loan-to-value on qualifying purchases.

Commercial lending in the same shop. Retail, storefront with apartments above, plazas, standalone buildings and multi-residential — unusual to find alongside residential lending in one broker-channel relationship, and useful where a borrower's file has both.

Also available: interest-only mortgages, open mortgages, mortgages held in a holding or operating company, student housing financing, spousal buyouts, secondary financing behind an Effort Trust first mortgage, and assignment purchases from a builder.

Not available: bridge financing, home equity lines of credit, and any rental program described separately from the general lending rules.

The headline feature is amortization: up to 40 years, which almost nothing else in this directory offers.

Effort Trust Income and Qualification Requirements

Ratios. Maximum 45% GDS and 50% TDS across the board. Wider than a bank, narrower than the 55/55 or 60/60 available at the more aggressive alternative lenders — the flexibility here comes from the amortization rather than the ratios.

Qualifying rate. The contract rate plus two points.

How income is read. Employment income counts in full, supported by a two-year average. Commission income counts with two years of assessments behind it. Seasonal income is averaged over two years and requires at least two years in the same industry. Maternity and parental leave counts at full income with an employer letter confirming the return date. Disability income counts in full with the insurer's confirmation.

Self-employed borrowers need two years in business, incorporated or as a sole proprietor, with two years of personal returns and assessments and, where incorporated, two years of corporate returns. There is a separate insured route for self-employed borrowers that reaches higher loan-to-value at shorter amortization.

Pension and retirement income counts with two years of slips, assessments and deposit history. Dividend, life income fund and annuity payments count with 90 days of deposits and two years of assessments. Child benefits count. Employment Insurance and workers' compensation income are considered individually. Support income counts up to half of total income and cannot be the main source.

Documents, generally. Two years of assessments across almost every income type — Effort Trust leans on filed tax history more than on current pay records. Down payment supported by 90 days of statements, and closing costs shown separately with the same 90 days behind them.

Down payment. From 5% on an insured purchase, and 25% on a conventional one, which is a meaningful hurdle: the conventional shelf here starts where most lenders' ends.

Effort Trust's Specialty Programs

Long amortization. The core offering rather than a side program. 40 years at 70% loan-to-value or below, and 35 years to 75%. Insured mortgages remain capped at 30 years for first-time buyers and new builds. On a file where the payment is the constraint, a 40-year schedule does more for affordability than a ratio concession.

Self-employed, conventional. Two years in business, lending to 75%, scores from 500, amortization to 40 years, loans to $1.5 million.

Self-employed, insured. Two years in business, lending to 85%, amortization to 25 years, under the insurer's own credit standards.

Holding and operating company lending. The mortgage can sit in a corporation, with the down payment coming from the company, lending to 75%, amortization to 40 years, scores from 500. Business licence, articles of incorporation and corporate returns are required.

Student housing. Financed to 65% of value with amortization to 40 years, and no guarantor required — borrowers qualify on their own. Most lenders either decline student rentals outright or demand a parental guarantee.

Interest-only. Available on purchases and refinances to 65% of value, scores from 500. The payment covers interest alone, which is the lowest-payment structure short of a reverse mortgage.

New to Canada. To 90% of value for permanent residents with at least one year of Canadian credit and employment.

Spousal buyout. To 75% of value with a separation agreement.

Assignment purchases. New builder purchases only, financed on the original contract price rather than the appraised value.

Minimum Credit Scores & Treatment of Liabilities

Minimum score 500 on uninsured purchases and refinances, and the same floor applies to the self-employed, corporate and interest-only programs. Insured lending follows the insurer's standards.

Credit history. A discharged bankruptcy is accepted with six months of re-established credit — one of the shortest waiting periods published anywhere in this directory, against the two years most lenders require. For a borrower recently out of bankruptcy, that alone can be the difference between financing now and financing in eighteen months.

Personal tax arrears can be paid through the transaction.

Liabilities. Heating is a flat annual figure varying by property type. Closing costs are shown at 1.5% of the purchase price and are the borrower's responsibility — they cannot be added to the mortgage, so the cash needs to be there. Support the borrower receives counts as supplemental income only, capped at half of total income.

Guarantors are used where the borrower is corporate or where the file needs support, and a full application and credit report is required from them.

Property taxes are paid by the lender on every file.

Terms & Amortization Options

Amortization — the main event.

The same 40-year ceiling applies to the self-employed, corporate and student housing programs.

Terms. Closed and open mortgages are both offered, with the term negotiated rather than drawn from a fixed grid.

Payments. Weekly, biweekly, accelerated biweekly, monthly and bi-monthly.

Prepayment. 10% a year, or as negotiated on the file — a tighter allowance than the 15% to 20% most lenders publish. The privilege is available on the anniversary or at maturity, and unused room does not carry forward to a payout.

Penalties. The greater of three months' interest or an interest rate differential, applied to whatever exceeds the contractual prepayment allowance.

Rate hold. 30 days. No pre-approvals, so the file starts with a firm agreement — and 30 days is short enough that the rate should be locked close to closing.

Porting is available on a purchase where the balance increases, with the two rates blended.

Special Notes

• Forty-year amortization. The reason most files come here. At 70% loan-to-value or less it lowers the payment further than anything a bank can offer, and it is available on owner-occupied, corporate and student housing files alike.
• Six months out of bankruptcy. Re-established credit for six months is enough, where most lenders want two years past discharge.
• Minimum score 500, with no separate tiering — a low score is a pricing question rather than a decline.
• 25% down on a conventional purchase. The trade-off for the flexibility elsewhere, and a real barrier for a borrower who has the income but not the equity.
• Closing costs cannot be capitalized. 1.5% has to be in the bank, documented over 90 days.
• Student housing without a guarantor, financed to 65%. Rare enough to be worth naming.
• Commercial and residential under one roof, which simplifies a borrower whose file spans both.
• Only one default insurer is used, so an insured file that does not fit that insurer's rules has nowhere else to go here.
• Only Equifax is used.
• Prepayment is 10% a year and does not accumulate — lighter than the market standard, and worth planning around on a file expected to pay out early.
• Cottages need year-round access, winterization, a proper foundation and non-wood heating, and are financed to 65%.
• Condominiums are financed from 450 square feet, which is at the accommodating end of the market.

Service Area

Southern and eastern Ontario only.

The corridor runs from London east through the Golden Horseshoe — Hamilton, Grimsby, St. Catharines and Niagara — across Burlington and the Greater Toronto Area to Kingston, north to Barrie, and out to Ottawa and its boroughs.

Nothing in northern Ontario, western Ontario beyond London, or outside the province.

Rural properties are limited to five acres and financed to 75%. Hobby farms are reviewed individually. Recreational properties need year-round access, winterization and a permanent foundation, and are capped at 65%.

Loan-to-Value Treatment

Loan-to-value sets the amortization, which is the relationship that defines this lender: 40 years at 70% or below, 35 years to 75%. A borrower deciding how much to put down is really deciding how long the schedule runs and therefore what the payment is.

Maximum loan $4 million, with the insured first-time buyer ceiling set by insurer rules. There is no published sliding scale reducing lending on expensive properties, which distinguishes it from most lenders in this directory — the ratio holds up to the loan maximum.