Real Estate

Buying First Home... Interesting Situation

  • Last Updated:
  • Oct 2nd, 2020 1:07 pm
Sr. Member
Jun 14, 2018
645 posts
656 upvotes
DudeManBro wrote: Hey everyone, long time lurker here but this is my first post. I will leave out all the unnecessary details. Here's the situation:
$35,000 in debt split between CC and LoC at RBC.
House is for sale, I want to buy it, it is $40,000.
Self employed small business owner, avg monthly income for past 2 years about $1500.

I have been paying around $400/month in interest on my debt + the $300 for minimum CC payment for the past few years, so $700/mo., while not making any headway on my debt, also while living with family. Never missed any payments though, I always find a way to make things work, but these interest payments have been decreasing my quality of life.

I want to consolidate my debts and get a mortgage, after which I should be paying LESS than I am now for my current debts, make progress on the total because the interest is much lower, AND also have my own home.

Mortgage broker told me I have no chance of getting a mortgage or loan because of my debt to income ratio, and that RBC probably wouldnt increase my limit. Suggested that I try to go to another bank, or multiple banks, to get a line(s) of credit worth $40,000. Buy the house. Return to him to get mortgage, and use that mortgage to pay off lines of credit for home, and all remaining CC/LoC debt at RBC.

My questions are:

Is this the best way to go about it, and/or is there any other way to do this?

Assuming I get the Lines of Credit to buy the house, is it possible to purchase the house, go back to the mortgage broker, get the mortgage and pay off the Lines of Credit withing a short period of time to avoid paying the interest on the lines of credit (which would be 6x higher than the mortgage interest)?

If any more details are necessary just let me know.
Thank you all for taking the time to read, I look forward to seeing what you guys think.

Edit: Forgot to mention, I also own a 40-acre piece of farmland. Is it possible to use this as collateral in any way?
You're making $18,000/year. Why aren't you actively trying to make more income, whether it's putting in more effort in your small business or taking a 2nd job? Even at minimum wage, it's extra money to pay off the debt and also would allow you to qualify for a higher mortgage.
Deal Fanatic
User avatar
Dec 10, 2004
6333 posts
2076 upvotes
Vancouver
DudeManBro wrote: Yes I usually have money left over but my biggest concern every month is trying to make sure I save enough for next months interest payment. :\
Find an non for profit to help you with all that. They may contact your bank. You can try contacting your bank to see if there are options they can offer. You are trying to buy a house yet only paying interest and worry for next month payment - that statement should've told you that you can't afford anything. You need some serious help. Heck, I knew people who were in your shoes and they just declared bankruptcy. You can't collect anything from someone who makes $1500 month. While may not be the best offer( among many given by different posters) you can consider not paying, having it sent to collections and then you can negotiate with collections for a better $$. I knew a guy who a few years back negotiated his 30K debt down to 20K with collections. He said take it or leave it as I have no money to give and they agreed( they signed a contract to avoid collections screwing him over). Again, not saying it's a good advice,but you are in such hole, you need some radical help. Another 2nd job would sure be amazing even if you can get another $1000/month and increase your payments to say $1500/m, you will get out of this quickly. Otherwise, this 40K will haunt you for the next 10 years with your small, %-only payments.
Newbie
Jan 8, 2019
57 posts
45 upvotes
dazz wrote: you can consider not paying, having it sent to collections and then you can negotiate with collections for a better $$. I knew a guy who
Before you jump into this option, make sure you discuss this with someone who knows this well enough. This could have a longer term impact and you should be aware of them, if any, before you take the decision. Maybe someone here can point help with some insights.

I'm glad that instead of storming out calling us names, you decided to not pursue the idea you posted and made up your mind to fight your way out of your debts. This is already progress in the right direction. Good luck, OP!

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