Purchasing a first home with borrowed down payment
Yasir and Salma were interested in buying their first home but didn’t have the minimum 5% down payment saved. Both professionals, had stable full-time employment earning a good income. They had very little debt and great credit scores. They worried if they didn’t buy a home soon, they might get priced out of the GTA market.
Having received our flyer, they contacted us to help create a plan towards home ownership. Our Mortgage Strategist, after reviewing their full financial picture, showed them a way to buy their first home by borrowing most of the 5% down payment. All it meant was for them to find a home a little less expensive than if they had their down payment already saved.
We sent their deal to an institutional lender that accepts borrowed down payments, and for a very slight premium on the mortgage rate, we were able to get Yasir and Salma into a home in Mississauga a lot sooner than they expected. Yasir and Salma hope to upgrade to a larger home after three years.
Getting preapproved for $140k more than at a bank
Laura and Greg, an expecting common-law couple, were looking to relocate from Bowmanville to Milton so they could be closer to family. Greg was planning on selling his Bowmanville townhome and use the proceeds towards the down payment for their Milton home. They both found a neighbourhood they liked but the issue they were facing was qualifying for a mortgage large enough at a bank in order to buy a home in their desired neighbourhood. The homes in the neighbourhood were selling for more than the amount of Laura and Greg’s bank preapproval. Laura saw one of our advertisements on Instagram and contacted us to see if we could help.
Laura and Greg, both had stable employment and strong credit. After reviewing their situation, our Mortgage Strategist submitted their deal to an Ontario credit union. The credit union came back with a preapproval for $140k greater than the bank’s preapproval amount! A credit union is able to approve a larger mortgage because it is not subject to the federal mortgage stress test guidelines; credit unions are subject to provincial legislation.
ALL new mortgages from federally regulated lenders (e.g. banks) are subject to the federal stress test which determines the homebuyers’ maximum borrowing amount. The stress test uses a qualifying rate that is the higher of 1) the Bank of Canada (BoC) qualifying rate, or 2) the contracted mortgage rate plus 2%.
Because we took Laura and Greg’s deal to an Ontario credit union, Laura and Greg qualified at their contract mortgage rate (and not subject to the additional 2% or BoC stress test requirements). In return, the credit union charged a slightly higher mortgage rate. Laura and Greg quickly placed a bid on a home that was accepted by the seller! Laura and Greg are looking forward to being closer to family and starting their new lives together with their future baby.
Mortgage renewal & using equity from home to buy 1st investment rental property
Saira owns the downtown condo she resides in and, like so many Canadians, the mortgage was with one of the big 5 banks. Her mortgage was up for renewal and she received her mortgage auto-renewal rate from her existing lender. Saira had heard from other homeowners in her network of how they received better renewal rates if they shopped their mortgage to different lenders. One of her network contacts referred us to her and she contacted us to see if we can help her find a lender with a better mortgage.
Saira is a professional who has been working full-time at her employer for 8 years. She has a good income, great credit, and decent savings. During our conversations with her, we learned she wanted to dip her toe into real estate investing but didn’t want to use all of her savings towards a 20% down payment.
Following a thorough review of her financial needs and goals, our Mortgage Strategist educated her on how she can use the existing equity in her home to put towards a down payment on a rental property. We advised her to refinance (instead of renew) her existing mortgage so to extend the total length (amortization) to 25 years. That way her existing monthly mortgage payments will decrease, thereby, giving her additional capacity to be approved for, when the time comes, another mortgage.
We sent her file to an institutional lender that approved her refinance at a far lower rate than her bank’s renewal rate offer. Saira is now actively hunting for her first investment rental.
UPDATE: Seven months later, Saira has bought her first investment rental condo in Mississauga and easily got the mortgage approved by the same lender!
Beating the bank employee rate of a big 5 bank on a renewal
Cesar is employed at one of the big 5 banks and has been employed there for eight years. His mortgage, on his Etobicoke townhome, is with the bank and came up for renewal. He reached out to our Mortgage Strategist to see if we could beat his employee rate. Before Sleep Easy Financial, our Mortgage Strategist worked with Cesar at the same bank.
Cesar and his wife are both professionals, employed full-time, with good income and good credit history. Since Cesar worked at the bank, he felt a sense of loyalty to keep his mortgage with them. Although we could’ve easily got him a lower rate with better terms at a Monoline Lender, we understood his reason for wanting to keep his mortgage with the bank. His wife, though, was open to switching lenders if it meant lower payments.
We ended up sending the deal to Cesar's bank and got a mortgage rate lower than the employee rate! We are able to consistently beat bank provided rates for our clients as banks understand the sophistication and competitiveness of the broker channel and are very reluctant to losing an existing customer to a Monoline Lender – happens more often than not! For this reason, banks have special offers available exclusively to a broker’s clients that are not available to their own branch’s customers.
Getting approved for a higher mortgage amount than at a big 5 bank
Ram and Mathangi were looking to upgrade from their existing home. They found their dream home in Markham and placed an offer. Unfortunately, the offer was rejected by the seller and Ram and Mathangi were unable to raise their offer sufficiently to satisfy the seller’s demands. The issue was the pre-approval amount the bank approved was falling short of the amount required.
Their realtor promptly referred them to us to see if we could help them get approved for a higher amount. Ram and Mathangi are both employed full-time as I.T. professionals and both have good income and strong credit scores. They have two beautiful daughters both under the age of twelve.
Our Mortgage Strategist, after going over the numbers, sent the deal to a Monoline Lender who allows both a higher debt-to-income ratio than the banks do, and also allows Government Child Care benefits to be included in income. Ram and Mathangi’s bank did not allow for Child Care benefits to be included on their mortgage.
The Monoline Lender approved the deal in under 40 hours for a considerably higher amount than the bank’s pre-approval. As a result, Ram and Mathangi increased their offer on their dream home and the seller accepted!
A Monoline lender has only one line of business – home financing. Monolines do not offer chequing or savings accounts, investment products, or physical locations. Monoline Lenders are not to be feared, they should be welcomed, as they are some of the most accommodating and client-oriented lenders around.
Turned down by a big 5 bank for the purchase of 4th rental property
Sam is a few years from retirement and looking to add to his real estate portfolio by purchasing a fourth rental property. Upon retiring, he plans to move into the property with his wife and disabled daughter. Sam has excellent credit and has been employed full-time with the same employer for 27 years. His wife stays at home to look after their beautiful daughter.
Sam found a 2-bedroom condo in Etobicoke. All of Sam’s existing properties are financed by the same lender – one of the big 5 banks. When Sam approached the bank to finance his 4th property, he was turned down due to his personal income combined with the total rental income from all his properties being insufficient to carry the new mortgage.
His realtor referred us to him and he contacted us to see if we could help. After gathering all of his documents, our Mortgage Strategist sent his file to an institutional lender that was more flexible in how they applied rental income towards a new mortgage.
We were able to get Sam approved at a better rate than what his existing lender was offering at the time on rental properties. Sam has said he will now be using us for all of his mortgage renewals going forward.
Self Employed purchasing first home with low reported income & damaged credit
Pierre along with his common-law partner are looking to buy their first home on a large parcel of land. His offer for a half acre rural property was accepted by the seller with a 5-day Condition of Financing.
Pierre has been self employed for five years running his own drywall contracting business. His accountant passes all of his expenses through his business leaving very little reported income at the end of each year. Since Pierre has used credit extensively to operate his business, he has credit blemishes on his file.
Both his low reported income and damaged credit is preventing Pierre from getting approved for a mortgage. His realtor referred us to him to see if we can help.
Our Mortgage Strategist sent this deal to two private lenders who were willing to share the risk. Private lenders are used in situations where the borrower is buying time in order to get their financial house in order so that they can qualify with an A-lender or alt-A lender in the future.
We were able to get Pierre’s mortgage approved before the expiration of the Condition of Financing. Going forward, Pierre will show higher bank deposits into his business account as well as advise his accountant to show considerable higher income.
Purchasing a home after a layoff due to the COVID-19 pandemic
Nav and Harj, recently married, are looking to purchase a home together. Nav is self-employed while Harj is a daycare worker. She’s been with the same company for 6 years and has recently been laid off due to the COVID-19 pandemic. Harj’s employer has assurred her that she’ll be back to work once the restrictions ease.
Nav and Harj found a lovely condo in the heart of Mississauga close to Square One shopping center. Because Harj had to use her CERB income to qualify for the mortgage, their income didn't meet the requirements of their bank (A-lender). Having timely received our flyer, they contacted us to see if we could help them find a lender.
Nav and Harj have a large down payment, good credit, and strong supporting documents. Our Mortgage Strategist sent their deal to an alt-A lender to get the deal approved and secured them a fantastic rate. Alt-A lenders are a safe and trusted option for self-employed borrowers as well as clients who fall just short of the big banks' requirements. We got them in a one-year term so once Harj returns to work and they get their income ratios in-line, they’ll be able to renew at an even lower rate with an A-lender in the near future.
Using a second mortgage following a job loss due to the COVID-19 pandemic
Omar has good credit but unfortunately lost his job very early on during the COVID-19 pandemic. He started piling up credit card debt and owed income tax arrears. Due to his loss of income, he was concerned about his first mortgage falling behind and losing his home in Vaughan.
His family friend referred us to him and he contacted us to see if we could help him. Our Mortgage Strategist advised Omar to get a second mortgage in order to consolidate his credit card debt and payout his income tax arrears. We also advised him to prepay his first mortgage from the proceeds of the second mortgage so that he can buy himself some time till he finds employment.
We sent his deal to a private lender who would extend a no-payment mortgage for six months and pre-pay Omar's first mortgage. Private lenders are used in situations where the borrower is buying time in order to get their finances back on track so that they can qualify with an A-lender or alt-A lender in the future.
The deal was funded and six months later, Omar was working again full-time and has now qualified for a mortgage with a great rate from an institutional lender and paid out the second mortgage. Omar is now without any credit card debt or income tax owing!
Refinancing two properties to lower the overall monthly payments
Jeff owns two homes both with mortgages. One home is his owner-occupied home while the other is occupied by his disabled parents. Jeff is the sole borrower on both homes and works full-time. He has held the same job for over seven years. Jeff would like to lower his overall monthly payments so he can increase his savings.
Jeff called us to help him assess his options. Our Mortgage Strategist advised him that if he refinanced both properties, we could get him a great rate on his owner-occupied home since it's in great condition and in a marketable location (the parents' owner-occupied home is in a less desirable location as it's outside a major urban center). We were able to tell the lenders Jeff's story and make a case for the refinancing; he takes care of his disabled, aging parents, pays his bills each month on-time, and has verifiable, steady income – all of which checked the lender's boxes.
All said and done, we were able to secure refinancing for both properties and Jeff lowered his overall monthly payments by almost 20% thanks to a large part to the great rate he received on his owner-occupied property.
Purchasing a home after a Consumer Proposal
Martin and Ria are a happily married couple with their first baby on the way and looking to upgrade from their downtown Toronto 1-bedroom condo to a semi-detached home in Oakville. They will be selling their condo in order to purchase the new home.
Both have respectable credit, but Martin filed a Consumer Proposal in 2019 which is making their mortgage acceptance difficult. The Consumer Proposal was paid shortly after filing and all credit lines have been paid as agreed. Their down payment for the new home will come from the sale proceeds of their condo.
Ria's co-worker referred us to her and she called us to help them get a mortgage as the Consumer Proposal made it difficult to gain an approval from their bank.
Our Mortgage Strategist advised them it is extremely rare to gain a mortgage approval at a big bank (A-lender) following a Consumer Proposal which is why we sent Martin and Ria’s deal to an alt-A lender. An alt-A lender works to understand the story behind a client's financial setbacks in order to get them approved for a mortgage that meets their needs.
We ended up getting Martin and Ria approved for a 2-year term which gave them the time needed to work out their finances so they can move to an A-lender with a lower mortgage rate at the time of renewal.