Real Estate

Help Mortgage Qualification

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  • Jun 29th, 2018 10:46 am
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[OP]
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Nov 26, 2014
359 posts
153 upvotes
Quebec

Help Mortgage Qualification

Hello,

I am out of ressources to find a solution or to convince the bank.

I recently divorced and i'm keeping the house.

I have no debts except mortgage which is 285 000$

The bank says my gross debt service ratio is too high so they don't want to qualify me for the mortgage.

The cost of my mortgage + interest + taxes + heating = 1990$ (mortgage alone is 1411$)

My gross income is 71 000$ / 12 = 5916$ monthly

GDS and TDS Ratio = 33.64% (same ratio because no debts other than mortgage)

My credit score is 802 and I never missed a payment in my life (14 years of credit)

The lender is First National.

If I sell the house now I would have a 27 000$ penalty because we signed a 5 years fixed about 8 months ago...

My plan is to keep the house 52 months and then sell it without penalty and take the cash to buy a smaller house.

Isn't it abusive to refuse to lend me with a 33.64% ratio and excellent credit report?

Please need some help and advice
20 replies
Deal Guru
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Mar 23, 2008
13002 posts
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Edmonton
Have you talked to a real person there? And asked what ratio they need to see to grant you a mortgage?

C
Deal Addict
Jan 15, 2017
4783 posts
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Ottawa
Your calculations appear to be based on your actual contract rates and not based on the stress test rates. How is FN handling your mortgage? Is it a refinance (which I assume as you are taking it over yourself)?
[OP]
Member
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Nov 26, 2014
359 posts
153 upvotes
Quebec
Ok I just talked to a real person.
They say my ratio is 39.7% and the maximum allowed is 39%.
They are at 39.7% because they use 5.49% instead of my 2.99%

The Problem is they use my T4 of 2016 and 2017 which average 68000$ but on the T4 of 2016 there is 4k missing because I had parental leave salary which appear only on Quebec papers...

I told the lady my T4 of 2017 is 71600$ and I had an increase of 6% in 2018... I can provide all proof of that.
Sorry Sir... we calculate the same way for everyone.. average of t4 2016 and 2017..

I asked what would be required to fit in your ratio? She said 70 000$

So I said you know I got it but because of your paperwork rules you can't make it happen?

I can't believe what's going on right now... i'm pissed..

Going through the whole separation process with my ex wife and our 2 kids is easier than dealing with the bank... unbelivable
Deal Guru
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Mar 23, 2008
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Edmonton
Is there any way your ex and you can leave the house issue as-is for now, until you can get your 2018 T4? Or do you need to get this done ASAP?

C
[OP]
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Nov 26, 2014
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Quebec
CNeufeld wrote: Is there any way your ex and you can leave the house issue as-is for now, until you can get your 2018 T4? Or do you need to get this done ASAP?

C
Man that's exactly what the lady at First National told me!
The problem with that is I want to buy her part of the house right now at the current price, not next year.
She is moving in an appartment next week.

We are in good terms but there is no way she will leave her name on the mortgage without owning the house (I would refuse that too)
Deal Guru
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Mar 23, 2008
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p0nk1n wrote: Man that's exactly what the lady at First National told me!
The problem with that is I want to buy her part of the house right now at the current price, not next year.
She is moving in an appartment next week.

We are in good terms but there is no way she will leave her name on the mortgage without owning the house (I would refuse that too)
Sorry to hear that. When I split up with my ex, we kept the house as-is for another year till the mortgage was up, and my ex lived in it with the kids. The mortgage and ownership stayed in both of our names. From my perspective, I figured it was better to keep the house for stability for the kids, plus as you pointed out, the penalties are significant.

Why did you sign a 5 year mortgage 8 months ago, and now you're divorced already? Mostly just curious, and I know hindsight is 20/20...

C
[OP]
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User avatar
Nov 26, 2014
359 posts
153 upvotes
Quebec
CNeufeld wrote: Sorry to hear that. When I split up with my ex, we kept the house as-is for another year till the mortgage was up, and my ex lived in it with the kids. The mortgage and ownership stayed in both of our names. From my perspective, I figured it was better to keep the house for stability for the kids, plus as you pointed out, the penalties are significant.

Why did you sign a 5 year mortgage 8 months ago, and now you're divorced already? Mostly just curious, and I know hindsight is 20/20...

C
We signed a 5 years fixed because money wise I thought it would be better for the next 5 years...
True love wasn't there anymore but I thought it was just normal family routine with 2 and 4 years old kids and that it would come back later.
She decided to leave a month ago.

I am confident that First National will eventually lend me the money.. I am within 39% with last year income and even better with this year income.
My credit report is excellent...

I will try to talk to someone more important next time if it still fails.. I'm sure someone there will forget paperwork for a second and go with common sense.
Deal Guru
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Mar 23, 2008
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p0nk1n wrote: We signed a 5 years fixed because money wise I thought it would be better for the next 5 years...
True love wasn't there anymore but I thought it was just normal family routine with 2 and 4 years old kids and that it would come back later.
She decided to leave a month ago.

I am confident that First National will eventually lend me the money.. I am within 39% with last year income and even better with this year income.
My credit report is excellent...

I will try to talk to someone more important next time if it still fails.. I'm sure someone there will forget paperwork for a second and go with common sense.
Honestly, my first response would be to try to drag out the mortgage resolution until you can get your 2018 T4. That should resolve your problem. Failing that (or maybe while doing that), maybe try talking to a manager/supervisor/ombudsman at the bank. You could even try some of the mortgage brokers here in the forum to see if they have any connections at First National.

C
[OP]
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Nov 26, 2014
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Quebec
Thanks for taking the time to answer me. I will try every possible solutions to remove my ex gf name on the mortgage ASAP
Let's see if someone here has direct connections with someone at First National... maybe i'll have a little bit of luck in all that story!

Otherwise i'll reach for Supervisor or Manager... I'm not asking them to lend me money while i'm above the limits... I am under the 39% and they know it..
They just don't accept to forget their basic rule of average 2016 and 2017..

Like I said i'm sure someone with common sense will override that paperwork rule.
Deal Guru
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Mar 23, 2008
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BTW... Will there be any spousal support flowing either way? Because that may affect your line 150 total income.

C
[OP]
Member
User avatar
Nov 26, 2014
359 posts
153 upvotes
Quebec
CNeufeld wrote: BTW... Will there be any spousal support flowing either way? Because that may affect your line 150 total income.

C
No spousal support, fortunately
Deal Fanatic
Nov 22, 2015
6380 posts
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p0nk1n wrote: Thanks for taking the time to answer me. I will try every possible solutions to remove my ex gf name on the mortgage ASAP
Let's see if someone here has direct connections with someone at First National... maybe i'll have a little bit of luck in all that story!

Otherwise i'll reach for Supervisor or Manager... I'm not asking them to lend me money while i'm above the limits... I am under the 39% and they know it..
They just don't accept to forget their basic rule of average 2016 and 2017..

Like I said i'm sure someone with common sense will override that paperwork rule.
It's not about what they know, but rather what you can prove on paper. No lender is going to risk getting nailed for funding a mortgage outside of TDSR/GDSR when they don't have the documented proof to back it up.
[OP]
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Nov 26, 2014
359 posts
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Quebec
superfresh89 wrote: It's not about what they know, but rather what you can prove on paper. No lender is going to risk getting nailed for funding a mortgage outside of TDSR/GDSR when they don't have the documented proof to back it up.
I have proof, but not the proof they want.
Deal Fanatic
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Feb 2, 2014
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p0nk1n wrote: I have proof, but not the proof they want.
I'm guessing you don't have any savings to make a prepayment on the mortgage? After you make a prepayment, you should be able to qualify on your own.

Find out how much qualify for. Get the difference from savings or a family member. Make a prepayment and then you will qualify.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Jan 15, 2017
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CdnRealEstateGuy wrote: I'm guessing you don't have any savings to make a prepayment on the mortgage? After you make a prepayment, you should be able to qualify on your own.

Find out how much qualify for. Get the difference from savings or a family member. Make a prepayment and then you will qualify.
That's a great option.
[OP]
Member
User avatar
Nov 26, 2014
359 posts
153 upvotes
Quebec
I only have RRSP. Withdrawing that is also last resort
Sr. Member
Sep 9, 2014
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Vancouver
So you have to requalify completely? If that's the case, find a mortgage broker (many good ones here) and shop around.

Otherwise I agree with the comment above me: borrow the money from somebody to make an extra payment. You are so close to qualify, it shouldn't be much anyway.
[OP]
Member
User avatar
Nov 26, 2014
359 posts
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Quebec
If the penalty and lawyer fees are not too high I might just go somewhere else... Didn't want to lose my 2.99% but I guess it's better then losing the house..
Deal Fanatic
Jul 3, 2011
6517 posts
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Thornhill
You're just $7500 a year in mortgage too high to qualify for that lender's mortgage.

You'd be looking for a value of $15,000 less. When determining what to pay your ex did you get a property market evaluation or appraisal and took into consideration costs to sell?

You've referred to her as your ex wife and also your ex girlfriend and there being no child support, is support them something the bank may be wary of that could be holding them back? In Quebec is there a difference between the wife and 8 months of common-law when it comes to dividing up the residence? What about joint bills and other assets, have you considered how to find the $7500 out of those if they exist?

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