MORTGAGES

How To Get A Mortgage

 

 

There's a Mortgage for Every Need & Situation!

commercial industrial investment residential working capital
cash back bankruptcy pay tax arrears business for self low income
lack of documents new to Canada power of attorney purchase + improvements rentals
spousal buy outs mobile homes condos first nations farms
second homes bank declines private consolidate debts business
construction zoning issues equity only contamination leased land

 

 

REAL LIFE SCENARIO:

'additional income not from traditional sources'
Applicant was a part-time employee at Shoppers Drug Mart working evenings and weekends since 2005. Applicant’s TDS ratio was over the maximum based on the verifiable income alone.

The lender underwriter contacted the mortgage agent to ask if the applicant could provide any additional sources of income to help make the deal work. The mortgage agent confirmed that the applicant worked evenings and weekends at Shoppers to allow her to provide childcare services for her grandchildren, which generated an additional $200/week of undeclared cash income.

Although the additional income could not be confirmed by traditional resources, the mortgage agent was able to provide three months of bank statements, which confirmed regular deposits of $200/week into the applicant’s chequing account, as well as a letter from the parents confirming the childcare services provided. Comfortable with the statements and the letter provided, the lender was able to use the additional income to reduce the applicant’s ratios and approve the deal as requested.

 

 

REAL LIFE SCENARIO:

'rental property purchase'
This client was a recent graduate beginning their career as a self-employed Doctor working in a busy family physician’s office with a walk-in clinic. The client was seeking to purchase a rental property in the name of a holding company supported by a personal guarantee.

Only being employed for six months prior to the purchase of the rental property, the lender had to take a closer look at the deal.

Working for an established practice the client was considered a self-employed Doctor responsible for all expenses incurred on a daily basis, in addition to building a client base independently. Based on six months’ of income verification, good future earning potential, and the high-traffic location of the clinic, the deal was approved for 65% LTV.

 

 

REAL LIFE SCENARIO:

'If purchasing a property and funding construction costs'
Land purchase price $200,000

Total soft & hard costs $400,000

Total cost $600,000 X 75% = $450,000 (loan amount)

In this example the Borrower will be required to put in the difference of $150,000 ($600,000 - $450,000). This will be required to be put in at closing to close on the purchase of the land. It will be a requirement in the commitment letter to confirm that the Borrower has the cash to contribute and not a VTB or some other form of equity.

The appraised value would have to be a minimum of $600,000 (not including taxes) in this example so the completed LTV is still in line at completion.

For the initial advance would fund:

Land purchase $50,000 (as Borrower would be required to put in $150,000)

Interest Reserve $30,000 (approx. 9 months interest)

Lender and Broker fee $15,750 ($450,000 X 3.5% as an estimate)

Legal fees $ 3,000

Total first advance $98,750 (this would leave $351,250 for the construction draws)

 

 

REAL LIFE SCENARIO:

If the borrower owned the property already and needs to payout existing debt (ie. $60,000)
Land value $200,000 ($60,000 is outstanding on the land)

Total soft & hard costs $400,000

Total cost $600,000 X 75% LTC = $450,000 (max we could lend)

 

Loan amount = $450,000

 

For the initial advance, we would fund:

Payout first charge $ 60,000

Interest Reserve $ 27,000 (approx. 9 months interest)

Lender and Broker fee $ 14,000 ($400,000 X 3.5% as an estimate)

Legal fees $ 3,000

Total first advance $104,000 (this would leave $346,000 for the construction draws)

 

This Borrower may need to put in a small amount but the equity would cover most of that would be required. The cost is now lower because we have paid some of the soft costs.