The challenge
Deciding to keep their current home as an investment property after failing to sell it has added to Mike and Sarah’s current debt load. And with low net incomes, meeting servicing requirements only made qualifying for a mortgage more challenging.
Their backstory
In their early forties, with two young children, Mike and Sarah recently decided to rent their existing home and purchase a new one in one of Oakville’s family-friendly neighbourhoods. This move would bring them closer to her parents, elementary school and lots of green space.
Mike, the primary applicant, has owned a regional transportation company for more than five years, while Sarah, the co-applicant, is a self-employed bookkeeper. She’s had her home-based practice for more than seven years.
With clean credit and good net worth, Mike and Sarah also had significant savings for a down payment and wouldn’t have to pull existing equity out of their primary home. With current market rents, they decided it was best not to sell their existing property, keeping it as an investment instead.
Our view
Mike and Sarah are an easy fit for our self-employed program. Both are successful in their own right; each has been in business for well more than the required two-year minimum and could provide six months of business account activity to support the cash flow to qualify for this mortgage request.
This couple also has good equity in their current home, that covers well with existing market rent. Consideration of 100% rental offset was also part of our review.
Required documentation that we review as part of our assessment includes:
- BFS registration and business account history
- Verification of market rent on existing property
Approval details
- 70% LTV purchase
- Down payment verification required
- Appraisal required
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TIPS
When submitting, it’s always best to provide verification of a business for self with six months’ worth of business account history to assist with our full underwriting review.
