Vicky may be a single parent, but from a very early age she has been buying and selling houses; taking advantage of the strength and stability of the GTA housing market to build up a net worth of almost one million dollars, and she is not yet forty years old. The bank said NO when she needed a mortgage – we said YES, using a 35 year amortization.
Vicky is willing to make personal sacrifices – including living with her parents in their Markham home while owning and managing a rental property.
At the moment she owns a rental house in the Durham region, and asked me to help finance a purchase of a new home for her and her teenager to live in. It’s time to reclaim their personal privacy!
She is acutely aware that lending criteria are tougher and tougher these days – she was told by her bank they could not approve her for a mortgage as she does not make enough salary to qualify. Using their calculation methodology, her total debt service ratio would be 45%.
Luckily mortgage brokers have access to a couple of lenders who will approve conventional (not hi-ratio) mortgages for as long as 35 years! This can make or break a mortgage application – the banks are limited to a thirty year maximum amortization period.
The new house costs $650,000 and Vicky has a twenty five percent down payment. Using a 35 year am, Vicky’s monthly payments will be $220 lower than the bank’s thirty year am, and more importantly – her total debt service ratio drops to 43%. Our lenders are willing to go as high as 44% for strong applicants with excellent credit.
The result is she has been approved, it’s full steam ahead, and they move into their new home three weeks from now. Vicky’s decision to think outside of the bank made all the difference between owning her new home and not.
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