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Posts Tagged ‘Mortgage Pre-approval’

Hamilton Homeownership Down Payment Assistance Program

March 30th, 2015 No comments

Deciding Whether To Buy Or RentToday the City of Hamilton has launched a program to help residents with the Downpayment to purchase their own home, in order to apply you will require a mortgage pre-approval. To find out more about this program and/or to obtain a pre-approval please contact Verico Designer Mortgages Inc. We will help you complete the necessary paperwork.

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Car Allowance

January 21st, 2010 No comments

Currently we are dealing with Brian; he has great income which includes a car allowance.  Brian is wishing to purchase his first home.  The scenario is as follows, he receives a car allowance of $900 per month, since he feels that the company is paying for his car, he leased a car with a monthly payment of $850 which is covered by the allowance. The common rationale behind this is that the two will cancel each other out. However, this is not the way the lenders look at the car allowance.

Upon applying for a mortgage pre-approval Brian discovered that the car payment is added to his monthly expenses making his total debt ratio to income quite high. Even though Brian’s car allowance is added to his gross income this does impact how much he can qualify for:

Scenerio 1:  No car allowance – company car
Purchase Price: $280,000  Down Payment: $20,000
Income: $49,200

Debts:
CIBC VISA $200/m

Mortgage Expenses:
Mtg Payment (based on purchase price – down payment) $1,129.30/m
Heat $75/m
Taxes $233/m

Total Debt Service: 40% of gross income-  client would qualify for purchase

Scenerio 2: Car allowance and car payment
Purchase Price: $280,000  Down Payment: $20,000
Income: $60,000 (added $900/m for car allowance to income)

Debts:
CIBC VISA $200/m
Car $850/m

Mortgage Expenses:
Mtg Payment $1,129.30/m
Heat $75/m
Taxes $233/m

Total Debt Service: 49% of gross income- client does not qualify – maximum purchase price $180,000

As you can see Brian’s purchase price is severely decreased by having the extra expense of his car allowance. Brain’s purchase price is going to be approximately $180,000 a substantial difference from the $280,000 he would qualify for without it. Many companies offer car allowances as opposed to company cars.  Before signing for any debt it is always advisable to talk to your financial advisor/accountant, and if you are looking to purchase a home in the future, sitting down with your mortgage broker could help reduce a lot of stress and frustration.  We have sometimes worked with people for years prior to them purchasing, it is never too early to plan for your future goals.

Charmaine Idzerda, Mortgage Broker (FSCO Lic#: M08000747) Verico Designer Mortgages Inc. (FSCO#: 10194)

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