Published: October 3, 2016 • Last updated: September 12, 2020 at 18:49 pm
Getting a Mortgage After a Split Can Be Difficult When You Pay Child Support or Alimony
After a marital split, arranging a mortgage can be difficult. Some people find it hard to qualify for a mortgage when they are on the hook for child or spousal support. The reason is most mortgage lenders consider these payments as a monthly liability, just like a car payment or other loan facility, and this effectively kills the Total Debt Service Ratio calculation.
Late in the spring, Bruce Dougherty found Ross Taylor & Associates while Googling this topic. He picked up the phone and called me to say he was in this exact predicament.Like any sort of loan, mortgage lenders consider support payments a liability and this can have a huge impact on your Total Debt Service Ratio calculations. Click To Tweet
Bruce has an excellent job and makes $120,000 per year. He has since remarried and he and his new wife would like to buy their own home together. The problem is Bruce pays a combined $40,000 in child and spousal support to his first wife.
His bank advised him this is like having a $3,333 monthly debt payment ($40,000/12) and as a result they refused him a mortgage. He went to two different banks and stated his case, but was declined there also.
Finding A Mortgage Solution for After a Divorce
Fortunately, mortgage brokers have access to dozens of lenders, and there are a few who will look at these circumstances differently. It only takes one!
These lenders are willing to simply reduce Bruce’s annual income by $40,000, thus making it $80,000; but without any associated liability for the support payments.
Bruce has no other monthly obligations so $80,000 income is more than enough to qualify for a mortgage now.
Bruce was skeptical at first, as he had been researching the topic for over a month with no success. However I polled some mortgage broker friends across Canada, and within thirty minutes we had the names of two “A lenders” I could work with.
Bruce then made an offer on a new home for $461,000 and asked me if we could arrange a mortgage for him, even though he only had a five percent down payment. Merix Financial came through quickly with a highly competitive five year fixed-rate mortgage.
Although it’s true there is an incredible amount of information on the internet, in this case, Bruce found what he needed the old fashioned way – he picked up the telephone and called us.If you or someone you know is having difficulty arranging a #mortgage after a marital break-up, please tell them there is hope! Click To Tweet
Ask Ross how he can help.