This month, the mortgage finance company launched Aveo Flex 40 in Ontario, Alberta and B.C., with plans to roll it out across the country “in short order,” according to CMLS Senior Vice President and Head of residential mortgages, Andrew Gilmour.
Gilmour says CMLS has seen a “large influx of applications,” in the days following launch, with deals already receiving funding this month. He adds that the product is a response to a more conservative lending environment, offering an innovative solution to borrowers who might otherwise have limited options.
“The product itself is intended to provide homeowners with the ability to purchase or refinance, and have the stability of cash flow thereafter,” Gilmour said in an interview with Canadian Mortgage Trends. “If we like the borrower and we like the asset itself, we are fine to provide that 40-year amortization; we think that’s a reasonable way to approach the market.”
Once a widely available option for Canadian homeowners, 40-year amortizations were phased out of the market in 2008 due to new rules introduced by the Department of Finance, which included stricter lending requirements and a reduction in the maximum amortization period for insured mortgages.
In 2012, the Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, introduced its B-20 guidelines, capping amortization periods for uninsured mortgages at 30 years.
“CMLS has a diverse capital base that includes regulated lending and unregulated lending, so we’re not subject to OSFI’s B-20 guidelines under this program,” Gilmour explains. “As a result, one of the key focuses for us is restoring new product innovation in Canada.”
Aveo Flex 40 will also be exempt from OSFI’s loan-to-income restrictions, which come into effect this year. Gilmour adds that CMLS is in a position to offer the product thanks in part to the recent acquisition by nesto and the access to capital it provided.
Aveo Flex 40 details: How it works
The longer amortization period is just one of the unique features of the Aveo Flex 40 product, says Gilmour, adding that the company is aiming to simplify qualification requirements as well.
“You don’t need to be an auditor anymore as a broker,” he says. “What I mean by that is, if there are six months of bank statements, we’re going to look at the top line revenue provided by those bank statements, and we’ll apply an income-to-expense ratio based on the industry you’re in.”
With a max GDS/TDS of 55% each, Gilmour says CMLS doesn’t need to sift through bank statements line-by-line, making it easier for brokers to communicate terms and qualification requirements to clients.
Gilmour adds that allowing asset depletion is another distinctive feature of the product.
“If you’ve got assets — including stocks, GICs, RRSP investments, etc. — we’re going to apply a metric to that, basically dividing by 120, and that’s what you’re going to be left with for income that can be used towards the application.”
Rates start at 6.84% for a 1-year term and 7.09% for a 2-year term for those with a credit score of 680 and above. The product is open to customers with a minimum credit score of 620, and under specific circumstances, 600. Aveo Flex 40 is also available for owner-occupied properties as well as rentals.
“We’re trying to make this as wide as possible from a product adoption perspective,” Gilmour says. “Ultimately, we think that we’re going to take market share away from the mid space and graduate it up to a product that’s a little bit more reasonable, and doesn’t carry hidden penalties, hidden fees, any of that stuff.”
New and improved broker partnership program
As CMLS looks to reintroduce itself to the broker market, it’s also introducing a revamped broker partnership program designed to be simpler and more straightforward.
“We’ve tried to re-frame our entire approach to the broker market to make it easier to work with CMLS, and to make it more transparent in terms of what we’re doing,” Gilmour says.
The new partnership program allows non-prime volume to count towards status targets, offers volume bonuses retroactive from deal one, and even grandfathers in brokers who met last year’s targets.
“In other words, we’re giving you credit on day one for the volume you did last year,” Gilmour says. “What that means is you get your bonus payment on every deal that comes through for 2025; you don’t need to wait.”
Brokers will be automatically slotted into the $5, $15 or $25 million volume bonus tiers based on last year’s performance, paying up to 120 basis points with a 70% approval-to-fund ratio.
“We’ve raised the compensation, and we’ve now included Aveo within the compensation structure,” Gilmour explains. “That was a pretty significant change that had been excluded before, so now any deal that a broker sends in is eligible for this based on the tiers.”
Brokers who qualify for any tier are also eligible for dedicated underwriting, furthering the organization’s aim of making life simpler for partners.
“When a broker hits the button to submit a deal to CMLS, we want it to be a smooth, clean experience,” Gilmour says. “We’re trying to signal to brokers that we want to be working with them.”
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40-year amortization Andrew Gilmour Aveo Flex 40 broker channel broker compensation cmls guideline B-20 mortgage broker nesto OSFI
Last modified: January 27, 2025