Mortgage Success Stories
Just like every homeowner is unique... so are their mortgage needs, and if matched correctly and creatively with the right mortgage lender all goals can almost always be achieved.
I have started creating a library of Examples on how mortgage products can be best used to assist homeowners, and how creativity and knowledge of available products can be utilized to help almost every homeowner no matter what their situation.
If you know of someone or a situation where financing seems out of reach and will not be able to acquire a mortgage, think again, with over 30 lenders available there is almost always a solution.
If you need advice or assistance with your mortgage I am always glad to take the time to chat.
I am on a fixed income and my payments are too high?
Jane is currently retired and living on a small pension with OAS/CPP. She is having trouble with her monthly obligations including her mortgage which is approximately $200,000 with monthly payments of $1,400.00 with an interest rate of 5%, and 18 years amortization remaining. She is also carrying credit card debt of $12,000 with a monthly (interest only payment) of $300. With the likeliness that she will never pay off her mortgage in her lifetime what can be done to help her?
By refinancing her current mortgage and penalty with a lower rate at 3.49% and adding to her mortgage her credit card debt, her monthly obligations will now be $889/month over 35 Years and $833/month over 40 Years.
- Jane now has more monthly funds available to enjoy her retirement.
- She is paying far less interest on her debts (a better use of her funds).
- Jane is able to sleep at night, not worrying about how she can afford to stay in her home.
Should I choose a Variable Rate Mortgage or Fixed Rate Mortgage?
John is not sure whether he should choose a VRM or a Fixed Rate Mortgage. Historically the VRM has proven to be the better product over time but there is still uncertainty of where prime will be next year. John likes having the security of knowing what his payments will be each month but he is still not sure whether he should choose a VRM or Fixed Rate Mortgage.
Today’s mortgage lenders have created a product that allows both a VRM and Fixed Rate Mortgage all in one product. You can decide whether you would like it to be split 50/50 or 70/30 or ?... it is your choice!
Also available with this type of product is a ‘Line of Credit’ which could be used for investing or for future resources if needed.
- John now feels more secure with his decision that if the Prime Rate increases his payments will not increase to the point where he will be financially challenged.
- He knows that the Morrison Mortgage Team will keep him up-to-date on a weekly basis of his Fixed lock-in rates so that if rates start to rise too much he has the option of converting/locking in his VRM to a Fixed Rate Mortgage on short notice at a fully discounted rate.
My credit has been damaged but my spouse has excellent credit?
Greg and Amber have been married for over 5 years. Greg has recently gone through a bankruptcy because his business was affected by the economy. His credit has been damaged to the point that mortgage lenders will either not consider him as an applicant, or offer him a rate that is too high.
Amber, however, has excellent credit and stable employment. Their home, that has an illegal basement suite, which is being rented for $850/month. They also have some unsecured debt they would like to consolidate into their mortgage.
Some lenders require, if a property is a matrimonial home, that a married couple must both remain on the mortgage and title which can make re-financing very difficult.
So what options do Greg and Amber have?
While some lenders require both Greg and Amber to be on the mortgage and title, other lenders do not. If a spouse is coming off the mortgage and title of a matrimonial home then almost all lenders will condition a ‘spousal consent’ (which is ‘independent legal advice from a notary or lawyer).
This will allow Greg to come off title and allow Amber to qualify on her own with the addition of the income from her suite.
At the same time Greg and Amber can payoff their unsecured debts and draw some money to acquire a secured credit card for Greg in order to re-establish his credit.
- Greg and Amber can re-finance their mortgage and will not be charged a high rate and fees because of Greg’s employment, credit situation and that their property is a ‘matrimonial home’.
- Their high interest, unsecured debt is paid off with a much lower rate.
- Greg is able to start re-establishing his credit with a secured credit card.
A 2nd Mortgage may be the best option!
Mark has been Self-Employed for over 2 years and does not claim a lot of income. He has accumulated some high interest credit card debt from starting up his business and has been having trouble meeting all of his payment obligations each month. Since he has been late with some of his payments his credit bureau ‘beacon score’ is 587 so he does not have the minimum required beacon score in to qualify for a Self-Employed mortgage product that allows a borrower to state their income within reason. It would be best to re-finance his mortgage and consolidate all of his debt but he does not qualify at this time.
Provide Mark with a 2nd mortgage that will pay out his high interest credit card debt, lower his interest rate, and lower his payments.
Mark can now better manage his monthly obligations
He is paying a lower interest rate now compared to his credit card debt
MOST IMPORTANTLY, he has paid off all of his credit card debt that shows on his credit bureau which will now allow him to re-establish his credit and increase his beacon score
Once his beacon score increases in 6-12 months he will then be able to qualify for a mortgagethat will pay out his 2nd mortgage
Mortgage Concern: Clients wanted to purchase a second home in a remote area of BC.
Our clients, Jim and Susan wanted to buy a vacation home in the interior. The property was only accessible for half of the year so many lenders they spoke to were not willing to lend on the cabin. One lender we spoke to, a local credit union, was willing to lend on the property but with a premium on the their best rates.
Most lenders will not finance properties in rural areas and this property was even more difficult to finance because it was not accessible all year round.
We reviewed the couple’s financial situation and learned that the clients had a rental property in Alberta that had been left to them a few years ago in Jim’s father’s estate. It was a clear title property so we arranged a mortgage for 80% of the value of the house. We used the proceeds of the mortgage to allow the clients to purchase their vacation home for cash.
Jim and Susan were able to get their vacation home without paying a fortune in interest charges to finance it. And, as a bonus, by refinancing their rental property, we were able to get the clients a tax deduction for the interest costs on the property.
Mortgage Concern: Clients wanted to refinance their rental property but were planning on selling it soon.
Arianna and Luke had recently renovated their rental property in the hopes that they would be able to sell it at a profit. Unfortunately, the market had softened and they would not have recouped their renovation costs if they sold it right away. They decided to continue to rent out the property and wait out the market. In the meantime, they wanted to refinance the property to pay off the cost of the renovations.
The clients also wanted the mortgage to be a Home Equity Line of Credit so that they would not have to pay a penalty when they sold the house.
The problem with refinancing now was the fact that Arianna owned her own business and was showing minimal income on her tax returns as she was able to write off a number of the couple’s expenses. With her current income, most lenders would not offer the clients financing.
As well, many lenders will not allow clients who are self employed to finance a rental property using a line of credit.
Using the strong relationship we have with one of our lenders, we were able to convince the lender to accept Arianna’s income as well as to use a large portion of the rental income to show that the clients would be able to afford the new mortgage. By reviewing the client’s business financials, the lender was able to see that her actual income was much higher than what was reported on her tax returns. As well, unlike many lenders today, our lender was willing to accept a large portion of the expected rental income to be used to cover the clients’ mortgage obligation.
Although the lender would not issue a line of credit for the mortgage, we were able to get the clients into a variable rate mortgage so as to reduce the penalty amount. When the clients sell the house, they will still have to pay a penalty, but with the variable rate mortgage, the penalty will be limited to 3 months interest.
Arianna and Luke were able to refinance their rental property with a mortgage that will minimize the penalty they will have to pay when they sell the house. They were also able to get financing in spite of the low income Arianna was showing on her tax returns.
And, the clients still get to write off the interest paid on the new mortgage!
Mortgage Concern: Client needs to draw equity to finish her basement for the purpose of rental income but does not qualify because her income is too low.
Louise, a retired school teacher, was having a hard time making ends meet now that she was retired but did not want to give up her house. She had decided to renovate her basement so that she could rent it out for additional income.
She came to us looking for financing, but based on her pension income, most lenders had turned her down.
We found a lender that was willing to issue a mortgage to Louise based on the amount of equity that she had in the house. They were also willing to use the rental income she was expecting to earn on the suite once the renovations were complete. The lender wanted to charge a higher rate for a 2 year term, along with a fee, to arrange the financing. Once we showed them that her pension income was taxed at the source, they saw that she was better able to afford the mortgage. The risk to the lender was lowered, and they were able to get CMHC to insure the mortgage. We finally were able to get the client financed at a very good 5 year rate and a small premium paid to the insurer.
Louise was able to get sufficient financing to renovate her basement to allow her to rent it out. She was able to keep her home with the additional income from the rent. In spite of her minimal pension income, we were able to get her a loan at fair market rates so that the cost of her mortgage was affordable and her principle and interest payments were locked in for the next 5 years.