Applicant wants to refinance home to pay off all outstanding debt and have monthly cash flow savings
Income and Debt Servicing
Commission-based income earning $90K annually, confirmed by previous 2 year's T4A gross and Year to Date commission statement
Employment verified by employment letter and verbal confirmation by employer
GDS/TDS is 37/37% with stressed TDS of 44% using the mortgage rate plus 200 BPS
Mortgage Details
LTV
80%
Property Value
$500,000
GDS/TDS Calculation
Commission-based Income
100%
$90,000
$90,000
GDS/TDS
37/37%
Stressed TDS
44%
Credit
540 Beacon due to missed bills during marital conflict
Excellent mortgage repayment history
Property
$500,000 property value
Good condition, well maintained property
Suburban area with DOM under 90
Deal Rationale:
Client was offered a 1 year mortgage at 80% LTV. The client was able to consolidate all of their loans and credit card debt and is saving $500 monthly.
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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.
