Case Study

Case Study

Sole proprietor of a bookkeeping company had applied to get a three year mortgage at 80% LTV. He bought a cottage 5 years ago and reached his credit limits renovating it. This home improvement venture lowered his beacon score to 600.
 

Purpose

·  Refinance home to pay off debts of $70K, save on monthly expenses, and improve cash flow

Borrower

·  Income of $130K
·  GDS/TDS of 31/38% with a stressed TDS of 44%

Property

·  $700,000 appraised value
·  Good condition, well maintained property
·  Suburban area
·  Average DOM: 15


Income Qualification
Broker included the following documents to qualify the $130K self employed income:

·  Signed Income Declaration form by owner:
 

Gross Revenue (annualized from bank statements)		$203,000
Annual Expenses		$73,000
Salaries and wages (not including your own salary/drawings)	10,000
Office Lease	15,000
Travel and Car	10,000
Cost of Goods/Material	28,000
Phone & Advertising	10,000
Qualifying Income (Revenue - Expenses)		$130,000

·  6 months business bank statements
·  6 recent contracts/invoices
·  Copy of business licence
·  Statutory declaration from the lawyer showing no taxes owing
·  HST/PST/GST # to indicate that no taxes were outstanding


Deal Rationale

With our help the client was able to pay off all his debts of $70K with enough leftover to start improvements on his primary residence. He saved $1,000 per month by consolidating all his debt into one mortgage with us. 

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