Personal Finance

New mortgage question

  • Last Updated:
  • Feb 23rd, 2010 7:58 am
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[OP]
Newbie
Dec 8, 2009
13 posts

New mortgage question

Quick question,
I have a 150K mortgage, living in a condo with my spouse. We are looking at buying a 230K house. If my spouse gets a 80K mortgage, will she need a 20% down payment to avoid the CMHC fees, or does my 150K mortgage factor in.

Thanks
17 replies
[OP]
Newbie
Dec 8, 2009
13 posts
I'm not too sure what 'port' means, but if I understand correctly, seeing as 80K only represents 35% of value, no CMHC?
Newbie
Nov 5, 2009
23 posts
Ottawa
means to transfer ur existing mortgage to the new house
Deal Addict
Jun 29, 2009
2307 posts
211 upvotes
Toronto
d_mcquil wrote:
Feb 22nd, 2010 10:24 pm
We are looking at buying a 230K house. If my spouse gets a 80K mortgage
Where does the rest of 150k for the value of the house comes from?

I think what sslinn meant by "porting" is whether you are selling your condo and then transferring that 150k you have left on your condo mortgage into this new house.

If you are bringing over that 150k mortgage from your condo into this new house and then you adding 80k mortgage, that would mean you are mortgaging the house 100% of its value ???

Feels like I am missing something.
[OP]
Newbie
Dec 8, 2009
13 posts
I have a 150K mortgage with my parents (145K left). So suppose I sell my condo 145K, this brings my mortgage with my parents to 0. I'll get a new 150K mortgage with my parents, and my spouse will get a 80K mortgage with an institution. We will have two mortgages to cover the full 230K, so my question remains, will she need a 20% cash down to waive CMHC fees?
Hope this make it clear...
Thanks again
Deal Expert
User avatar
Aug 22, 2003
15541 posts
971 upvotes
Niagara Falls
There is no way with the new changes coming that a bank should touch you for 100% financing. You'd have to disclose the $150k mortgage that your parents will hold on the property. In real terms I think you're going to have to put 10% minimum down (of the $230k) on the new house.

Frankly, this move makes zero sense financially. You'll be loosing money on the condo by the time lawyers fees, real estate fees, etc are paid. Realistically you can't afford this move and need to stay put and build more equity in the condo. Sorry...
Thinking seriously about the 4 S's...Sun, Sand, Surf and ... Booked for Sept in Mexico and booked Samana DR for Jan!
[OP]
Newbie
Dec 8, 2009
13 posts
More details...
The condo was purchased 1 year ago 135K including all fees. I took a 150K mortgage-loan with my parents for extra cash. I have a 60K salary, my spouse makes 35K. I don't get your 'makes zero sense financially' statement (but obviously you didn't have all the details, I won't be loosing money on the condo).
I would disclose the 150K mortgage with my parents. My only question is why would my spouse have to put down 20% if she is only borrowing 35% of the homes value?
Jr. Member
Jan 30, 2010
105 posts
Calgary, AB
Ok, so correct me if I'm wrong. You both want to buy the same home for 230K.

You want to have a 150K mortgage in your name?
She wants to have a 80K mortgage in her name?

If so, you cant do that.

If its one address with 2 owners you both have to be on the 1st mortgage, and even the 2nd mortgage too. Lenders dont divide properties like that. What if one wanted to sell later and the other didnt?
Deal Expert
User avatar
Aug 22, 2003
15541 posts
971 upvotes
Niagara Falls
You're mortgage is what they call "underwater"... that means you owe more than what it's worth. Not good. Selling will involve fees which realistically need to be figured into the balance sheet. It's not a smart financial move.

As I said, it really isn't going to matter that your spouse will only be looking for an $80K mortgage. What matters is that you will have to disclose the $150k mortgage. With this 150k mortgage the $80k you're looking for will mortgage the house to 100%. This shouldn't be allowed and won't be with the new CMHC changes. You'd have to at the very minimum put down 10% of the $230k and fully qualify. Can your spose qualify on their own for the full $230k? Can you as a couple? You're trying to justify it as 2 seperate mortgages but banks will look at it as a whole as they should...
Thinking seriously about the 4 S's...Sun, Sand, Surf and ... Booked for Sept in Mexico and booked Samana DR for Jan!
[OP]
Newbie
Dec 8, 2009
13 posts
Nigel8600 wrote:
Feb 22nd, 2010 11:49 pm
You want to have a 150K mortgage in your name?
She wants to have a 80K mortgage in her name?

If so, you cant do that.
I guess thats an important point I didn't know. So my options are now to either get more from my parents and get my spouse on board, or get a new mortgage together with my spouse from an institution.

And to answer CSK question, we do have approx. 20K for down payment. Guess we'll have to change our outlook on the whole situation.
Deal Expert
User avatar
Aug 22, 2003
15541 posts
971 upvotes
Niagara Falls
Run some mortgage calculators and get an idea of what you can actually qualify for mortgage wise, using both incomes (and debts). At the very minimum, if your numbers are in line, you're looking at saving at least another $3k plus all closing costs. Don't forget all the other costs associated with moving either, things like utility hookups, actual moving expenses, etc. Do a spread sheet and see what the numbers truely are.

Typically if you're thinking about moving up the real estate ladder you should have enough equity in the current property (payed down mortgage plus any gains in the market) to have a lower mortgage on the next property, not larger....
Thinking seriously about the 4 S's...Sun, Sand, Surf and ... Booked for Sept in Mexico and booked Samana DR for Jan!
Deal Addict
Jun 29, 2009
2307 posts
211 upvotes
Toronto
As been said, taking 100% mortgage is ridicolous, and it's exactly what led to the market crash in the US. Also, taking out mortgage "separately" between you and your spouse wont work.

You bought your condo for 135k and expecting to sell it for 145k, that's not even 10% increase, also calculate in the commissions etc in selling the condo, you havent made a good investment at all ... you could easily have gotten a lot more in the past year by playing in the stock market.

You also have combined household gross income of almost $100k and you have only saved $20k for downpayment?

I think you need to review your financial situation first (eg. figure out where all those money go, how you can save more for downpayment and save more in general) and see how you can put yourself in a better position for house ownership.
[OP]
Newbie
Dec 8, 2009
13 posts
damnos wrote:
Feb 23rd, 2010 12:22 am

You also have combined household gross income of almost $100k and you have only saved $20k for downpayment?
Whats wrong with saving 20K from 100K income in a year...represents 20% savings rate. Am I not saving enough (27 yo)?

And like I said before, I bought the condo 1 year ago, 10K profit net from all fees and closing costs represents about 7.5% annual return...

Apart from my mortgage, no loans, or credit card debt, car paid in full, etc.

10K in TFSA and Quebec pension plan, 70% of income after 30 years of work.

Now having the whole picture, does this look more viable or do I need to re-calculate things?
Jr. Member
Jan 30, 2010
105 posts
Calgary, AB
d_mcquil wrote:
Feb 23rd, 2010 12:04 am
I guess thats an important point I didn't know. So my options are now to either get more from my parents and get my spouse on board, or get a new mortgage together with my spouse from an institution.

And to answer CSK question, we do have approx. 20K for down payment. Guess we'll have to change our outlook on the whole situation.
Yes, thats what you need to do.

If you and your parents sell the condo and break even on it, now you, your parents, and your spouse can go into the new mortgage together and qualify for the new 230K which would only be 184K with 20% down with no cmhc fees.

Or, you four people combined must come up with a minimum 11.5K down payment and about 3K for closing costs. If you can do this you will be fine but with cmhc fees added to the mortgage.

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