• Last Updated:
  • Nov 11th, 2020 8:55 am
[OP]
Newbie
Jul 7, 2017
19 posts
15 upvotes

Financing question

Hi,

I am hoping someone could help clarify how my TDS/borrowing capacity would be affected if I financed a $40,000 purchase of private shares from my company at 3.45% that return a dividend of 20% per year rather than paying cash. I have the cash available, but I am hoping to scale and finance multiple properties in 2021 so I’m not sure if financing or paying cash is the better option. I currently have no debt.

Thanks in advance!
3 replies
Deal Addict
Jan 15, 2017
4109 posts
3612 upvotes
What monthly payment would you be looking at on the loan?
[OP]
Newbie
Jul 7, 2017
19 posts
15 upvotes
skeet50 wrote: What monthly payment would you be looking at on the loan?
Hi Skeet, basically $115 per month. The repayment terms are as follows:

First three (3) years, no principal payments are required, interest only payment of $115 per month. Starting fourth year, principle paydown of 20% per year for next 5 years until the loan is payed off in full.
Deal Addict
Jan 15, 2017
4109 posts
3612 upvotes
So we know then that you have a current liability of $115 a month and a future liability of $782 a month.

Using a stress test rate of 4.79%, the $782 a month liability would reduce your mortgage qualification amount by about $138,000.

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