Real Estate

Co-signing for Parent & Approval for Separate Pre-con

  • Last Updated:
  • Nov 1st, 2019 3:06 pm
[OP]
Member
Nov 30, 2009
422 posts
47 upvotes

Co-signing for Parent & Approval for Separate Pre-con

There is a scenario that my wife is looking into possibly co-signing a separate property with her mom for the mortgage amount of $165,000.00 to $200,000.00. My question is, will my wife and I still be able to get approved for a mortgage for a pre-construction property we originally signed for when it finishes construction mid next year?

To paint a better picture my income is approximately $83,500.00 and my wife's is approximately $80,000.00.

We also selected approximately $30,000.00 in upgrades on the pre-construction so the total price will be around $672,900.00 with a minimum down payment of $134,580.00 (it most likely will be more depending on the profits on the sale of our current property). So we'll need a mortgage of at least $538,320.00.

So to summarize, given that my wife will potentially co-sign with her mom on a $165,000.00 - $200,000.00 mortgage, will we have any issues with our own property mid next year when it comes time based on the above?

Breakdown of the individual properties below.

Mother-in-law's Property:
$165,000.00 to $200,000.00 mortgage
$21,000.00 + $80,000.00 income
$4,000.00 property taxes

Our Upcoming Pre-con:
$538,320.00 mortgage. Potentially less depending on transferred profits from sale of current property.
$83,500.00 + $80,000.00 income
$2,800 property taxes
10 replies
Deal Fanatic
Feb 29, 2008
9787 posts
5096 upvotes
Depends on other factors like debt and beacon but seems doable to me. That's my uneducated guess. You should speak to a mortgage professional.
[OP]
Member
Nov 30, 2009
422 posts
47 upvotes
JayLove06 wrote: Depends on other factors like debt and beacon but seems doable to me. That's my uneducated guess. You should speak to a mortgage professional.
We only have some line of credit debt and HELOC debt which we used for deposits on the pre-con, but it will pretty much be consolidated once we sell our current property. When a mortgage broker/specialist looks into the TDS, do they look at my wife as if she's paying for 100% her mom's mortgage, property taxes, heating, etc.? She's simply just co-signing but will not be covering any expenses on her mom's property.
Deal Fanatic
Feb 29, 2008
9787 posts
5096 upvotes
DRGN89 wrote: We only have some line of credit debt and HELOC debt which we used for deposits on the pre-con, but it will pretty much be consolidated once we sell our current property. When a mortgage broker/specialist looks into the TDS, do they look at my wife as if she's paying for 100% her mom's mortgage, property taxes, heating, etc.? She's simply just co-signing but will not be covering any expenses on her mom's property.
You'd have to ask a mortgage pro on that one. I've never co-signed anything but banks like to limit risk so I would not be surprised if they treated your wife as paying the whold mortgage. Worst case scenario, what if her mom can't pay the mortgage? It falls on your wife. So, gotta talk to someone. All banks have different ways on how they calculate this kind of stuff so you gotta ask.
Deal Addict
User avatar
Jan 2, 2012
3526 posts
1401 upvotes
Toronto
DRGN89 wrote: So we'll need a mortgage of at least $538,320.00.

So to summarize, given that my wife will potentially co-sign with her mom on a $165,000.00 - $200,000.00 mortgage, will we have any issues with our own property mid next year when it comes time based on the above?
To be safe you should plan on qualifying for a mortgage of $538K + $200K = $738K,

The very fact that your wife is needed to co-sign her mom's mortgage, means that her mom can't qualify on her own so will be seen as a risk to make payments. So any new lender will consider scenario where your wife must be responsible for 100% of that mortgage.

Based on 5x income as qualifying factor, you may be safe up to around an $800K mortgage but I would talk to a mortgage broker first.
Deal Guru
User avatar
Mar 23, 2008
10312 posts
6574 upvotes
Edmonton
DRGN89 wrote: We only have some line of credit debt and HELOC debt which we used for deposits on the pre-con, but it will pretty much be consolidated once we sell our current property. When a mortgage broker/specialist looks into the TDS, do they look at my wife as if she's paying for 100% her mom's mortgage, property taxes, heating, etc.? She's simply just co-signing but will not be covering any expenses on her mom's property.
Your wife IS 100% responsible for her mom's mortgage, if her mom ends up not paying. So yes, it will count, even if she doesn't ever plan on paying any money. You should definitely consult a mortgage professional before anyone signs any papers.

C
Deal Addict
Jan 15, 2017
2906 posts
2259 upvotes
DRGN89 wrote: We only have some line of credit debt and HELOC debt which we used for deposits on the pre-con, but it will pretty much be consolidated once we sell our current property. When a mortgage broker/specialist looks into the TDS, do they look at my wife as if she's paying for 100% her mom's mortgage, property taxes, heating, etc.? She's simply just co-signing but will not be covering any expenses on her mom's property.
Yes, 100% of the costs for her Mom's condo will be added as a liability as your wife may very well be 100% responsible for these costs. When you state that she is "simply" con-signing, please understand that in ON, a co-signor goes on title and is 100% responsible for the costs. The mortgage will show as a debt on your wife's credit report.

Here's a great tool that you can use as a starting point. https://itools-ioutils.fcac-acfc.gc.ca/ ... H-eng.aspx

I agree with other posters that you should definitely meet with a mortgage broker to see what your overall mortgage amount may be.
Deal Addict
Jan 13, 2014
1543 posts
522 upvotes
Calgary
I can help you. do you know what the payments are going to be on your mother in laws property? We can work out the TDS for you.
[OP]
Member
Nov 30, 2009
422 posts
47 upvotes
masarwar wrote: I can help you. do you know what the payments are going to be on your mother in laws property? We can work out the TDS for you.
What kind of payments do you mean?
Heating cost approx. $100/month
Property taxes are approx. $333/month
Deal Addict
Jan 13, 2014
1543 posts
522 upvotes
Calgary
DRGN89 wrote: What kind of payments do you mean?
Heating cost approx. $100/month
Property taxes are approx. $333/month
mother in laws mortgage payment

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