Mortgage Lending for Non Owner Occupied
ITV means Investment to Value. LTV means Loan to Value.
We recommend that you are stricter with non-owner occupiers than with people who intend to live in the property as they typically have a higher default rate. It’s not their home and if a tenant moves out and trashes the home, they may not want to spend money fixing it up again. Remember that they may be buying the property for less than the appraised value.
Note that the ITV refers to the “as is” value, not what the property could be worth if fixed up. Always insist on an appraisal by a licensed appraiser, preferably of your choosing.
Example: A house is worth $100,000.
The mortgage is for $80,000. The LTV is 80%.
You buy this mortgage for $70,000. Your ITV is 70%.
You may just want to buy part of the mortgage and thus reduce your investment and risk.
Non Owner/Occupier buying Single Family Home or Condo:
| Credit Rating | Investment to Value | Desired Yield to you |
|---|---|---|
| A+ No 30 day late last 12 mths FICO=680+ | 75% | 12.20% |
| 65-74% | 11.70% | |
| 55-64% | 11.20% | |
| A 1 30 day late last 12 mths. FICO=660-680 | 75% | 12.30% |
| 65-74% | 11.80% | |
| 55-64% | 11.30% | |
| A- 2 30 day late last 12 mths. FICO= 640-660 | 75% | 12.45% |
| 65-74% | 11.95% | |
| 55-64% | 11.45% | |
| B+ 3 30 day late last 12 mths. FICO=620=640 | 70% | 12.60% |
| 60-69% | 12.10% | |
| 50-59% | 11.60% | |
| B 4 30 day late last 12 mths. FICO= 600-620 | 70% | 12.75% |
| 60-69% | 12.25% | |
| 50-59% | 11.75% | |
| C 60 day lates last 12 mths. FICO=520-600 | 65% | 12.90% |
| 55-64% | 12.40% | |
| 45-54% | 11.90% |
Remember, the above are guides only. Never let anyone tell you how to invest your money. As a practical matter, if someone has put up 10% of their own money to buy your property it is very unlikely the loan will default, although there are exceptions.
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