SHBC accepts documents in English and Korean.
All documents in languages other than English or Korean must be translated in to English and be notarized by a lawyer for authenticity.

Appraisal will be ordered by the Underwriter from the list of SHBC approved Appraisal Companies. Please note the following:

• Market rent appraisal is required for all applications using rental income.
• Appraisals must be paid by the customer. Appraiser will contact the customer directly.
• Appraisals are valid for 90 days prior to SHBC’s approval. A new appraisal must be conducted if the appraisal was conducted more than 90 days ago.

SHBC does not offer insured mortgages. The applicants must provide at least 20% of the purchase, where minimum of 10% of purchase is from own resources without borrowing.

The sources and accumulation of down payment fund must be legitimate and acceptable in relation to the overall customer profile.

Non-borrowed own resources are:

Bona fide savings of the applicant from sources such as;

• own employment / investment income / pension / trust fund /benefit / grant
• proceeds from sale of investments or real estate
• legal or insurance settlement / lottery or casino winnings / inheritance
• proceeds from business (confirmed by business bank statement, and ownership verified by Business Name Registration or Articles of Incorporation)
• non-repayable, unencumbered gift from immediate family with gift letter provided

If part of down payment is borrowed, all income-contributing borrowers must have a minimum FICO score of 680 or KCB score of 780.

Borrowed portion of the down payment must be confirmed by either the credit report or statement/agreement. Payments must be included in the GDS/TDS calculations

Confirming source of down payment 

Below table outlines examples of documentations that are required depending on the source of down payment.

Loans are secured by liens on the following dwelling types:

• Single Family Residences
• Multifamily dwellings with two to four units
• Townhouses
• Condominiums excluding units of coop apartments

Property size must meet below minimum square footage requirement

SHBC currently provides mortgage financing for properties in Ontario and British Columbia. We will also accept applications in city of Calgary and Edmonton on case-by-case basis

Where part or all of the down payment is gifted to a borrower, it should be accompanied by a Gift Letter from those providing the gift confirming no recourse. Gifted down payment from the spouse is excluded from Gift Letter requirement if the spouse is a guarantor.

Incentive and rebate payments (i.e. “cash back”) should not be considered part of the down payment.

If Heating is included in the condominium maintenance fee, Heating cost does not need to be calculated. If Heating cost is not included in the condo fee or if the property is a freehold property, refer to below table.

• Most recent Notice of Assessment (NOA) is required for all Canadian income to confirm there is no outstanding income taxes owing. Online version of NOA, “Proof of Income” is also acceptable
• “Current” documentation is defined as being dated no earlier than 90 days of application.

Lease in Place

• Subject: 90% Gross rental income to be added as part of Gross Income and 100% of operating rental expenditures (PITH and 6 months’ condo fees if applicable) to be added as part of expense.

• Non-subject: 90% Gross rental income less operating rental expenditures, then add or subtract from Gross Income
  • Operating rental expenditures for non-subject properties include: PITH and 12 months’ condo fees (if applicable). Heating can be excluded if paid by the tenant or already included as part of condo fee.

Using Market Rent

• Appraisal report with market rent estimate required
• Market rent can only be applied against one rental property and following conditions must be satisfied.
  • Properties must be located within Metropolitan Area
  • Minimum FICO score of 680 or KCB score of 780 for all income-contributing applicants

• Income calculation method is same as above
• If market rent is provided by the appraiser and no lease agreement is in place, use the lower end value of the range.
• Maximum Loan Amount for subject is restricted to $1M
• Maximum LTV for subject is restricted to 75%, unless:
  • the purpose of the loan is for purchase of a newly constructed property, or;
  • subject property will be used as the new principal residence, and the market rent is being applied to current principal residence

• 80% of gross rental income (from market rent) shall be recognized.

Partial Rental Income from Secondary Suite of Owner-Occupied Property

• Partial Rent from Subject Property:  In order to use partial rental income from subject property, market rent appraisal is required.
• Partial Rent from Non-Subject Property:  Partial rent from non-subject property can only be used as rental income if there is a lease agreement in place (i.e., no market rent for currently vacant units).
• Partial rental income from the secondary suite of owner occupied property shall be used at 90%, and 100% of related expenses must be added to monthly debts (P.Tax, Heat, and 6 months’ condo fees are not to be excluded from GDS/TDS calculations).

Co-Ownership for Non-Subject Rental

• In case where a non-subject rental property is co-owned with a third party (spouse, family, relatives, friends, acquaintances, etc.) not relevant to subject application, rental income from the property must be adjusted accordingly with the ownership percentage.
• Percentage of share determination shall be done based on T1 General, and if the information is unavailable for recent tax year, share % will be 1/n % unless share ownership clarified with other documents (i.e. co-ownership agreement).
• Net Rental Income in co-ownership will be added to or subtracted from Gross Income

Bank allows up to 80% LTV, subject to sliding scale, rental property LTV restriction, tier classification and program-specific restrictions.

Metropolitan Area refers to a densely populated city and its less populated surrounding area sharing industries, where the Bank considers credit risk to be lower.

Currently, Bank’s definition of Metropolitan Area includes Greater Toronto Area (GTA), Greater Vancouver Area (GVA), Calgary Metropolitan Region (CMR), Edmonton Metropolitan Region (EMR), plus the following major urban centres:

• Barrie, ON.
• Hamilton, ON.
• Kitchener-Cambridge-Waterloo, ON.
• London, ON.
• Ottawa, ON.
• Abbotsford, BC. (excludes Chilliwack and Mission)
• Kelowna, BC.
• Calgary, AB.
• Edmonton, AB.

Minimum housing cost should be added as an expense unless the primary borrower holds a primary residence title or actual rental expense is already included as an expense as part of GDS/TDS.

•   Minimum housing cost is as below:
  •    GTA/GVA: $800/month
  •    Other Metropolitan city: $700/month
  •    Rest of Canada: $600/month
•   Minimum housing cost should be calculated per person, with exemption to spouses living at same address.
•   Minimum housing cost may be reduced or waived in exceptional cases (i.e. confirmed residency with parent(s)) at Underwriter’s discretion.
•   For a foreign income earner, $600 per month of minimum housing cost should be added as an expense as part of GDS/TDS, unless the person owns a primary residence in the foreign country or rents without on-going rental expenses (e.g., “Jeon-Se” in Korea), or actual rental expense is already included as an expense as part of GDS/TDS.
•   Minimum housing cost cannot be waived for a foreign income earner

• One Primary Residence is permitted
• One Secondary Home occupied by the borrower or an immediate family is permitted
• Up to 5 residential rental properties in Canada per borrower are permitted, including properties owned by personal investment / holding companies (50% or more interest in the property). This includes rental properties financed at other institutions and rental properties that are free and clear.

Prepayment penalty and privilege apply to borrowers with a Closed Term mortgage.

SHBC’s prepayment privilege is as below, and if the borrower makes a prepayment in excess of the privilege the borrower will be subject to the prepayment penalty.

• Borrower can make one lump-sum payment up to 10% of the outstanding principal amount in each anniversary year. The anniversary date is the date the fund was advanced.
• If the borrower makes a lump-sum payment more than 10% of the outstanding principal amount, the excessive payment amount over the 10% will be subjected to the prepayment penalty.
• If the borrower already utilized the prepayment privilege in the same anniversary year, the entire lump-sum payment will be subjected to the prepayment penalty.
• Prepayment penalty is greater of 3 months’ interest or Interest Rate Differential (IRD).

Proof of property tax payments shall be obtained from the applicants through following:

• Property tax bills
• Mortgage Statements with property tax statements
• Final statement of adjustment from builder for new constructions
• For Ontario properties without a proof of tax assessment, use 0.75% of the purchase price as the property tax.
• For British Columbia properties without a proof of tax assessment, use 0.40% of the purchase price as the property tax.

Minimum FICO score of 680 or KCB score of 780 is required for all income-contributing applicants for 80% LTV on rental property. Otherwise, the maximum LTV shall be restricted to 75%.

Sliding scale on maximum LTV is based on the property value and the geographic location.