Thursday, November 15, 2018

Case Study 11



The applicant is a sole proprietor of a salon.  He has accumulated $65K in debt, spanned across multiple credit sources, from renovating his apartment. His applied for a one year mortgage at 80% LTV and provided the following documents to qualify the $90K BFS income:

Documentation Provided:

  • 6 months business bank statements
  • 6 recent contracts/invoices
  • Copy of business licence
  • Statutory declaration from the lawyer showing no taxes owing
  • HST/GST number
He submitted a signed Income Declaration Form which calculated the client's qualifying income:   

A) Gross Revenue
Annualized Bank Statements
$193K
B) Annual Expenses
Salaries and Wages
(minus client's own salary/drawings)
$35K
Lease for office/store space
(if applicable)
$25K
Other Annual Expenses:
Cost of goods/materials
$33K
Phone
$10K
Total Annual Expenses$103K
C) Qualifying Income (A - B) = C$90K

Deal Rationale:

The client's GDS/TDS was 36/36% with stressed debt service ratio of 43%. The client qualified for a one year mortgage at 80% LTV to consolidate debts with $1.2K in monthly savings. After paying off $65K in debt, the client had enough leftover equity to purchase a new grooming station for the salon and expand its operational capacity.

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MoneyValue
t: 416 822 5886
e: contact@moneyvalue.ca
www.moneyvalue.ca

Wednesday, October 31, 2018

Case Study 10





Here is a scenario where a couple with a past bankruptcy secures 80% LTV to renovate their home to include a basement rental suite and improve their cash flow.

Clients:

  • Married couple
  • Verifiable incomes proven by letters of employment and recent pay stubs
Credit:
  • Primary applicant has a 582 Beacon due to previous bankruptcy
  • Client has strong repayment history since bankruptcy
  • Stressed TDS of 41% using the mortgage rate plus 200 BPS
Property:
  • Marketable owner-occupied detached property with unfinished basement
  • Comparable homes average 26 days on market
Deal Rationale:

The client qualified for a 1 year mortgage at 80% LTV to pay off their existing first and second mortgages. The remaining equity was re-invested into their home to renovate their basement into a rental suite. The couple now has an improved cash flow of $600/month and a rental suite to generate additional income.





















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MoneyValue
t: 416 822 5886
www.moneyvalue.ca


Saturday, October 20, 2018

Case Study 9


Seasonal Worker Mortgage Solution

Here is a scenario where a seasonal landscaper/snow removal applicant qualified for a $450K home using self-employed income.

The applicant is is a seasonal worker. They earned $60K as a snow remover from November-February and $50K as a landscaper from March-September. With a Beacon score of 560, the applicant is looking to purchase a new home. His broker provided the following documents to qualify the $83K BFS income:

Documentation Provided:

  • 12 months business bank statements*
  • 3 recent contracts/invoices for landscaping
  • 3 recent contracts/invoices for snow removal
  • Copy of business licence
  • Statutory declaration from the lawyer showing no taxes owing
  • HST/GST number
*12 months of statements showed income that allowed us to offer a better rate than just using 6 months for self employed mortgage


A) Gross Revenue
Annualized Bank Statements
$110K
B) Annual Expenses
Salaries and Wages
(minus client's own salary/drawings)
$0
Lease for office/store space
(if applicable)
$0
Other Annual Expenses:
Cost of goods/materials
$26K
Phone
$1K
Total Annual Expenses$27K
C) Qualifying Income (A - B) = C$83K

Deal Rationale:

The client's GDS/TDS was 35/35% with stressed debt service ratio of 42%. The client qualified for a 1 year mortgage to purchase a detached home in a great neighbourhood where all comparable homes were 10 days on market or less.

Contact MoneyValue and Tell Us Your Story
t: 416 822 5886
e: contact@moneyvalue.ca
https://moneyvalue.ca

Friday, October 12, 2018

People With Disabilities: Steps to Take Control of Your Finances


People With Disabilities: Steps to Take Control of Your Finances

Thinking about the financial impact of the potential need for care is not easy. It can feel like a heavy topic, filled with possibilities we do not want to consider. But, there is much that can be done in the now to give your future the support you deserve.

Save Through Further Assistance

To best prepare for your financial future, it’s a good idea to save what money you can. There are a variety of ways you can do so, and applying for additional assistance to cut back on everyday costs is one. For example, there are programs that provide energy assistance to those with a low-income. If you qualify, you’ll get a yearly payment to help cover the burden of your electric bill. You can also apply for income-based housing, if you do not already have it. This can help you save additional funds that you can later put toward medical care. Again, if you qualify, food stamps can be a great way to save a bit of money at the grocery store. If possible, you can work a bit from home to earn some extra income. You might sell crafts or art on Etsy, resell things on Ebay, or any number of other avenues. However, you need to be careful because you might lose your Social Security if you earn too much.

Long-Term Care Insurance

Unfortunately, much of Medicaid and many general health insurance policies will not cover long-term care. This includes assisted living, day care services, and importantly, in-home care. As we age, we may become less independent around the home, and we may need additional help with our daily routines. Long-term insurance will cover this care. Such care can maintain a person’s independence and dignity as we age. It is important to shop around, however, as prices and coverage can vary. Speak to an advisor to get good advice and guidance to see if this is something you may need.

Spouse’s Income

If you require care, Medicaid won’t pay your spouse to provide it. There is good news, however, as many states have programs that will allow you to elect your own caregiver, which may be your spouse. Yet, you need to ensure that you qualify financially to be eligible. Your spouse must make less than $25,000 a year and, jointly, you must have less than $4,000 in physical assets. Luckily, that does not include a home. Some programs are put in place by Medicaid itself and then handled through a separate agency, but some are state run entirely. Additionally, some states offer paid family leave, which allows for a spouse or other family member a period of time in which they can care for a loved one. Unfortunately, not every state has a program in place, so do research if yours does. If you are a veteran, you have additional support, including for your spouse.

The Benefits of a Reverse Mortgage

One way to pay for safe, sufficient care later in our senior years is to consider a reverse mortgage. This is not your typical mortgage, but is a home equity loan. You receive monthly payments, which you don’t have to pay back until you leave the home, either through sale or if you pass away. Thankfully, the loan will never exceed the value of the home, so you will never enter debt. Care, no matter if it is private, in-home or assisted living, can be quite expensive. A reverse mortgage may be just the way to pay for it, depending on who currently lives in the home, and how long they will be there. Assess all of the pros and cons for your particular situation and check different mortgage options to pick which is best for you.

Your needs are specific to you. Disability varies and there's no one template, but there are universal actions you can take to start planning for the possibility of care as you age. You deserve a secure future and today's financial decisions can be crucial to that.


hazel.bridges@agingwellness.org



Image Courtesy of Pexels.com

Wednesday, October 10, 2018

Case Study 8

https://moneyvalue.ca



Purpose
  • Applicant wants to refinance a newly constructed home to consolidate 1st and 2nd mortgages and payoff $25K in debts
Income and Debt Servicing
  • Salaried income earning $89K annually
  • Employment verified by employment letter, pay stub, and verbal confirmation by employer
  • GDS/TDS is 36/36% with stressed TDS of 43% using the mortgage rate plus 200bps

Mortgage Details
LTV80%
Pre-Construction Property Value (2016)$400,000
Post-Construction Property Value (2018)$500,000


GDS/TDS Calculation

Salaried Income 100%$89,000

GDS/TDS
36/36%

Stressed TDS
43%


Credit
  • 550 Beacon due to piling of bills during past unemployment
  • Excellent mortgage repayment history
Property
  • Newly constructed home purchased in 2016
  • $500,000 current appraised value
  • 3 comparables in a highly marketable prime lending area with DOM under 90
Deal Rationale:

The client was able to refinance their home for $400K on a 1 year term at 80% LTV. The client was able to consolidate their 1st and 2nd mortgages, $35K in debt, and improve their cashflow by $700 monthly.

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