The challenge
While Priya and Ray were excited to purchase a rental property in Toronto for $825,000, they were facing several challenges. They are rate-sensitive, they had 25% down and they also needed a lender who could assist by using market rent in servicing.
Their backstory
Both have verifiable income: Priya has been in commission sales for more than five years, while Ray is full-time salaried. With beacon scores of 690 and 660, respectively, they also have excellent equity in their primary home, which is valued at $1.5 million and has a first mortgage of $425,000.
Our view
We saw two applicants investing in real estate as a plan for their future. We can assist with this scenario, as our rates for rentals, at contract + 0.25%, are very competitive, and we can consider up to 100% rent or market rent to assist with servicing requirements. To meet our 65% LTV requirement on rentals, we considered the equity of their primary residence, and in the end, offered a blanket mortgage solution.
Approval details
- $618,750 mortgage (75% of the purchase price)
- Blanket mortgage to be registered with primary home
- Amortization: 25 years
- Income:
- Two-year T4A average and letter of employment for Priya
- Salary letter and paystub for Ray
- Appraiser to support market rent
- Down payment from savings
TIPS
Provide full details on any additional properties and outstanding mortgages. We need to ensure that any additional property that would be used is either free and clear or that any registered first mortgage is not shown as a collateral charge.
​DID YOU KNOW?
To assist with the purchase of a rental property, a secondary home or a cottage, using the combined equity from a primary residence may assist in a higher LTV offering at the time of our review.
