24 Jul

Correct Steps to Take Following a Bankruptcy

General

Posted by: Adam Sale

Steps to take following a Bankruptcy

If you’ve had a previous bankruptcy or consumer proposal don’t worry!  There are still many lenders in the prime-space which will lend to you if you follow the correct steps.

Lenders will accept a mortgage application after you’ve been discharged from your bankruptcy for a minimum of 2 years, and they you have at least 1 trade-line in your personal name (not joint) for a minimum of 2-years.

A trade-line could be a pre-paid credit card, an auto loan/lease, or a line of credit.

If you’ve had a bankruptcy, the first steps to take you should take once you’ve your “discharged from bankruptcy” letter is to obtain a  secured prepaid credit card as soon as possible, and to start using it actively.

While using this secured credit card do not exceed a balance of 50%, and don’t miss any payments for the full 2-years. During this time, try to increase your card limit from the usual $500 limit to a $2000 limit. A higher limit will provide more lenders to choose from once your credit is re-established.

After they have a gone through this 2-year process your credit will be considered re-established so you are able to qualify for high-ratio and default insured mortgages at prime banks.

If you have any questions please contact me at 778-215-4121.

Thanks,

17 Jul

Rule-of-Thumb on Qualifying Limits

General

Posted by: Adam Sale

If you’re a salary or stable income employee with minimal debt payments, here’s a quick Rule of Thumb to help you figure out your qualifying limits.

Regular salary and hourly income employees with a down-payment of less than 20%, and have minimal debts, will qualify for a mortgage amount that’s approximately 5-times their annual salary.

80k Salary = Loan amount of approximately 400k

Regular salary and hourly income employees with a down-payment of 20% or more, and has minimal debts, will qualify for a mortgage amount that’s approximately 5.5-times their annual salary.

80k Salary = Loan amount of approximately 440k

Of course there are many factors which will either raise or lower your qualifying amounts such as: consistent income, yearly bonuses, differing condo fees, property tax amounts, credit score, etc.

If you would like to do a complete pre-approval to figure out your maximum qualifying limits please contact myself at 778-215-4121 or adamsale@dominionlending.ca.

 

3 Jul

Are You Self-Employed and having a tough time getting Approved?

General

Posted by: Adam Sale

Are you self-employed and having a tough time getting approved at Your bank?

Prime lenders have made it difficult for self-employed (sole proprietor and corporation) earners to obtain financing through regular banking channels. These individuals are now forced to decide between either paying less taxes, or paying less interest.

Sub-prime lenders calculate self-employed income differently than prime lenders and look at the persons total financial picture. The additional income discovered will often be enough to help the self-employed individual qualify for a larger loans, while keeping payments marginally more expensive.

For example:

A 500k conventional mortgage at 2.59% will have a monthly payment of $2,262

A 500k sub-prime mortgage at 3.69% will have a monthly payment of $2,546

The monthly difference is $284; and the annual difference is $3,408.

An additional $3408 in interest a year is not a cheap premium by any means! But what if our self-employed individual can’t qualify for a loan of this size because they don’t pay themselves enough income from their company?

The only way to qualify for a larger amount through a prime lending channel is to show more income – which means paying more taxes.

Depending on which tax bracket they’re in, showing an additional 10-15k in income would translate to roughly a $3,408 tax bill.

Strategy

If a self-employed individual is not able to qualify for mortgage through a prime lender, a sub-prime option may be a great alternative. Sometimes only a 1-year or 2-year term is all that’s required to set an individual up with a prime lender in the future.