National Bank - Optimum Mortgage Mortgage Review: Rates, Lending Guidelines and Who They Suit

National Bank - Optimum Mortgage Mortgage Review: Programs & Lending Guidelines

How National Bank - Optimum Mortgage'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.

National Bank's Mortgage Offering — Residential

National Bank's broker-channel lending program is an alternative shelf. Nothing on it is insured, and it exists for borrowers whose income or credit does not fit a prime lender — the self-employed, the recently discharged, borrowers carrying tax arrears or collections.

First mortgages on purchases and refinances of owner-occupied homes and rental property, to 80% of value with 20% down. Detached and semi-detached homes, condominiums, and acreages within limits. Loans from $100,000 to $1 million, with a lower minimum in Atlantic Canada.

Second mortgages are permitted behind a National Bank first.

Lending in a holding company is available in every province where the company is a passive holding company and all beneficial owners give a personal guarantee.

Bridge financing to $500,000 for up to 60 days, in the western provinces and Ontario, requiring a firm sale.

Not available: construction financing, any home equity line of credit, insured lending, and any prime or insured spousal buyout program. Age-restricted properties are not financed.

Terms are short and fixed-leaning — one, two and three years fixed plus a five-year variable — which suits the way the shelf is used: a place to sit for a couple of years while credit or income is rebuilt, then move on.

National Bank Income and Qualification Requirements

Ratios. 50% GDS and 55% TDS on both the documented self-employed and bank statement programs, with further flexibility considered on the specifics of a file. Payments reported on the credit bureau can be used rather than a formula, which helps where the reported payment is lower than a percentage calculation.

Qualifying rate. The greater of the contract rate plus two points or the benchmark.

How income is read. The self-employed borrower is the core customer here, and there are two routes:

• Documented. At least two years self-employed, with a full personal tax return and business activity statement, a tax assessment, three to six months of bank statements and a signed declaration. Incorporated borrowers substitute their own slips alongside the same supporting material. Larger files may need financial statements.
• Bank statements. Income established from deposits rather than filings, at a slightly different rate, with the same ratio limits.

Contract income counts where the contract is legal and professional, has run at least a year, and the majority of income comes from that source — documented by the contract, bank statements and a declaration. Salaried income needs an employment letter and a recent pay record.

Commission income counts against a prior-year commission statement and a current one. Seasonal income counts, whether confirmable or self-employed. Pension income counts against deposits. Investment income counts. Support income counts with an agreement and three months of deposits. Child benefits count in full for children under thirteen. Foster income counts up to half of total income. Long-term disability counts.

Employment Insurance cannot be the only income, but works as a supporting factor for seasonal workers or a parent on leave. Maternity and parental leave counts with a confirmed return date.

Rideshare and delivery income counts on six months of statements and invoices. Short-term rental income counts only where the property being financed is not itself a short-term rental, and then as secondary income.

Foreign income is not preferred, though income from a small number of comparable countries may be considered where it is confirmable and salaried or pension-based.

New to Canada. There is no formal program, but a thin credit file can be supported with rent and utility history.

Non-permanent residents are financed to 65% of value on owner-occupied property with salaried income, with the term not running past the work permit.

Down payment. Minimum 20%, gifted funds permitted from immediate family on owner-occupied homes, rentals and second homes alike.

Closing costs are not required to be shown on the alternative side — a real easing on a tight purchase.

Tax arrears, consumer proposals, judgments and collections are all permitted on the documented self-employed program, and can be dealt with through the transaction.

National Bank's Specialty Programs

Documented self-employed program. For borrowers at least two years self-employed, owner-occupied or rental, in medium and large centres, at 50/55 ratios with a minimum score of 600. Its defining feature is what it tolerates alongside the income: tax debt, consumer proposals, judgments and collections are all explicitly allowed. A modest rate premium applies.

Bank statement program. Income from deposits rather than tax filings, owner-occupied and rental, minimum score 600, ratios 50/55, to 80% of value with second mortgages permitted. Amortization to 30 years on a fixed term and 25 on a variable. Property minimums apply, and acreages are financed to ten acres at a reduced ratio.

Holding company lending. Available in every province through a passive holding company, with all beneficial owners personally guaranteeing.

Rental lending. Available on both programs rather than as a separate shelf, with rental income supported by leases, filed rental schedules or a market rent assessment where a property is being purchased or converted.

Bridge financing. Up to $500,000 for a maximum of 60 days in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, requiring a firm sale agreement on a property listed for sale.

Cottage and recreational properties. Considered where they are genuinely four-season, not remote, with a full kitchen and bathroom and proper water and sewage — well and septic accepted — to 65% of value, and structured as a second home.

Blanket mortgages across more than one property are possible on the alternative side where the circumstances warrant it.

There is no equity or net worth program, no professional program, and no formal newcomer program. The flexibility here comes from the ratios and the credit tolerance rather than from a menu of named products.

Minimum Credit Scores & Treatment of Liabilities

Scores. 600 on the documented self-employed and bank statement programs. On the general shelf, the score sets the loan-to-value directly: 550 or better supports 80% of value, and 500 or better supports 75%. Below 500 the file falls outside guidelines — which puts a real floor under the shelf.

Credit history. A discharged bankruptcy is accepted with twelve months of re-established credit — half the two years most lenders demand. Orderly payment of debts is accepted. A bankruptcy or consumer proposal within the past twelve months draws a rate premium rather than a decline. Tax debt, judgments and collections are all workable.

Liabilities. Line of credit and credit card payments can be taken from the bureau rather than calculated as a percentage, which is more accommodating than a formula where the reported payment is low. Debt service is applied flexibly against the file rather than to a hard ceiling.

Heating is a flat annual figure by property type — highest for a detached home, lower for a townhouse condominium, lowest for an apartment.

An annual maintenance fee applies on the alternative side, which is a modest recurring cost rather than a one-time charge and is worth factoring into the comparison against a lender that charges a larger fee up front.

Guarantors are permitted.

No closing cost requirement on the alternative side; insured files elsewhere in the group carry one.

Terms & Amortization Options

Terms. One-, two- and three-year fixed, and a five-year variable. There is no long fixed term here — the shelf is designed to be a stop rather than a destination.

Amortization. Up to 30 years on a fixed term and 25 years on the variable — an unusual distinction, and one that makes the variable a materially higher payment on the same loan. Acreages and some property types run shorter.

Payments. Standard frequency options.

Prepayment. 20% of the principal each year, a 20% payment increase, and double-up payments — the full market-standard allowance, which alternative lenders frequently trim.

Penalties. The greater of three months' interest or an interest rate differential plus an additional point — the extra margin is specific to this shelf and makes an early payout more expensive than the standard formula suggests. Worth weighing against the short terms on offer.

Porting is available subject to the borrower and the new property qualifying, and blend-and-extend is offered.

Registration is a standard charge, which keeps the mortgage straightforward to move at maturity — important on a shelf where the plan is usually to leave within a few years.

No pre-approval program is published; the shelf works on live transactions.

Special Notes

• Tax debt, consumer proposals, judgments and collections are all explicitly allowed on the self-employed program. For a business owner carrying a tax balance, that is often the whole reason the file lands here.
• Twelve months of re-established credit after a discharge, against the two years most lenders want.
• Credit score sets the ratio, not the answer — 550 supports 80% of value and 500 supports 75%, with 500 as the effective floor.
• The variable rate caps at 25-year amortization while the fixed reaches 30. On a stretched file the fixed term qualifies for more.
• The prepayment penalty carries an extra point beyond the usual three-months-or-differential formula.
• 50/55 ratios on both self-employed programs, which is at the generous end of the alternative market.
• No home equity line of credit and no construction financing.
• Age-restricted properties are not financed.
• No closing cost requirement.
• An annual maintenance fee applies rather than a large single lender fee.
• Short-term rental income counts only if the subject property is not itself a short-term rental.
• Non-permanent residents are financed to 65% on salaried, owner-occupied files, with the term matched to the work permit.
• Bridge financing runs 60 days, which is shorter than most and needs closing dates planned around it.
• Property minimums are around 800 square feet for a detached or semi-detached home and 500 for a condominium — the house minimum is at the higher end of this directory.

Service Area

Lending is governed by proximity to population centres, and the rule is specific: within roughly 10 kilometres of a medium centre of 30,000 or more, or within 50 kilometres of a large centre of 100,000 or more.

That is a tighter radius around medium-sized cities than most lenders in this directory apply, and it means a property twenty minutes outside a mid-sized city may fall outside the map even though a larger centre's radius would have covered it.

The documented self-employed program is confined to medium and large centres specifically.

Bridge financing is available in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Loan minimums are lower in Atlantic Canada, which indicates lending there as well.

Rural properties are financed to ten acres at a maximum of 65% of value, with five acres considered more readily. Cottages and recreational properties must be four-season, not remote, with a full kitchen and bathroom and proper water and sewage — well and septic accepted — at 65% of value and structured as a second home.

A specific address is worth confirming before firming up a purchase agreement, since the radius rules cut finer than a provincial or city list.

Loan-to-Value Treatment

Credit score is the primary lever. It sets the maximum ratio directly rather than the approval, and it also sets pricing. A borrower deciding whether to spend a few months repairing credit before applying is deciding between 75% and 80% of value — on a $700,000 property, roughly $35,000 of difference.

Property value reduces the ratio. Loan-to-value may be cut on higher-value properties, so the headline percentage does not hold indefinitely as the price rises.

Property type matters. Acreages and recreational properties both cap at 65% regardless of the borrower's profile, and condominiums and detached homes carry different minimum sizes.

Second mortgages are permitted behind a National Bank first, so combined lending can exceed what the first alone provides.

Loan sizes. From $100,000, or a lower minimum in Atlantic Canada, up to $1 million. There is no insured route, so the down payment or existing equity carries every file — a minimum of 20% on a purchase, gifted funds permitted.