Personal Finance

trying to purchase 3rd property

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  • Sep 2nd, 2011 2:57 pm
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Deal Addict
Apr 4, 2006
3676 posts
403 upvotes

trying to purchase 3rd property

My fiance and I both own properties:

she has a condo and is renting it out, her rent covers all operating expenses.
I own a triplex, where the gf and i live on 1 floor and rent out the other 2. the rent from the other two floors gets me 100-200/month profit after expenses.

We both work full time, and make a semi-decent salary.

I have talked to TD about purchasing a 3rd property and they had said for rental income they can only take 50% of the income and use it towards ur salary, which is fine and i've heard of that before. after running the numbers he said we could only afford a mortgage of 150-175k


I have also heard with some of the smaller mortgage companies that they can use up to 80%? as long as u have 20% downpayment? does anybody have any new information about this? or any other ideas how we can purchase another property WITHOUT selling 1.
5 replies
Deal Addict
Jan 11, 2004
1277 posts
161 upvotes
Electricute wrote: My fiance and I both own properties:

she has a condo and is renting it out, her rent covers all operating expenses.
I own a triplex, where the gf and i live on 1 floor and rent out the other 2. the rent from the other two floors gets me 100-200/month profit after expenses.

We both work full time, and make a semi-decent salary.

I have talked to TD about purchasing a 3rd property and they had said for rental income they can only take 50% of the income and use it towards ur salary, which is fine and i've heard of that before. after running the numbers he said we could only afford a mortgage of 150-175k


I have also heard with some of the smaller mortgage companies that they can use up to 80%? as long as u have 20% downpayment? does anybody have any new information about this? or any other ideas how we can purchase another property WITHOUT selling 1.
I would speak to an experience mortgage broker that deals with investment mortgages. The big 5 banks will use 50% add back to qualify you for a mortgage. There are other secondary lenders that will do better then that. Please drop me a PM if you need a reference to a investor focused mortgage broker (it's not me and I don't get a kick back).

Without knowing the details, I would assume a 3rd property shouldn't be too much of a problem.
Deal Addict
Jun 6, 2007
1025 posts
139 upvotes
KINGSTON, Ontario
CIBC and BMO used 80% for my rental income when I had a 20% down payment for a 2nd rental property.

I think your girlfriend would have a better shot getting a rental property as the sole owner since she would have no rent or mortgage payment factoring into her total debt servicing ratio (assuming you don't charge her rent or declare the rent if you do).

We are in similar positions in that I am trying for a third mortgage and my girlfriend owns a property. Because I am living in my girlfriend's home and for all intents and purposes not paying rent, I am more eligible for an additional home than she even though I have two mortgages and she has only one. This is because the rental income on my two homes covers mortgage payments which would otherwise be added to my TDSR; where as she has a mortgage payment with no income to match. Hence, all else equal, I have a lower TDSR and hence I am eligible to buy a 3rd property but she is not.

One more note; why don't you try getting renting out the property in which you live. With lease in hand (to commence sometime in the future, after you move out) proving future income, you'd have additional income to offset the mortgage payment for the triplex.
Deal Addict
Jan 11, 2004
1277 posts
161 upvotes
dgodsell wrote: CIBC and BMO used 80% for my rental income when I had a 20% down payment for a 2nd rental property.

I think your girlfriend would have a better shot getting a rental property as the sole owner since she would have no rent or mortgage payment factoring into her total debt servicing ratio (assuming you don't charge her rent or declare the rent if you do).

We are in similar positions in that I am trying for a third mortgage and my girlfriend owns a property. Because I am living in my girlfriend's home and for all intents and purposes not paying rent, I am more eligible for an additional home than she even though I have two mortgages and she has only one. This is because the rental income on my two homes covers mortgage payments which would otherwise be added to my TDSR; where as she has a mortgage payment with no income to match. Hence, all else equal, I have a lower TDSR and hence I am eligible to buy a 3rd property but she is not.

One more note; why don't you try getting renting out the property in which you live. With lease in hand (to commence sometime in the future, after you move out) proving future income, you'd have additional income to offset the mortgage payment for the triplex.

When did they use 80% add back? Rules change so often. I was under the impression all 5 big banks use 50% add back now when qualifying rentals.
Deal Addict
Jun 6, 2007
1025 posts
139 upvotes
KINGSTON, Ontario
The approvals were done in June, 2011.

I received the approvals through Kingston, Ontario branches of BMO and CIBC. With BMO I dealt with a run-of-the-mill mortgage officer; with CIBC I dealt with a regional mortgage advisor who really seemed to know how to close a deal. For example, 80% of rental income was used and only interest payments on my pLOCs were added to my TDSR, rather than the customary 3% of balance.

I'd keep swinging with different mortgage officers. One of them will go the distance for you.
Deal Addict
Jan 11, 2004
1277 posts
161 upvotes
dgodsell wrote: The approvals were done in June, 2011.

I received the approvals through Kingston, Ontario branches of BMO and CIBC. With BMO I dealt with a run-of-the-mill mortgage officer; with CIBC I dealt with a regional mortgage advisor who really seemed to know how to close a deal. For example, 80% of rental income was used and only interest payments on my pLOCs were added to my TDSR, rather than the customary 3% of balance.

I'd keep swinging with different mortgage officers. One of them will go the distance for you.

Very cool. Good to know.

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