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  #1  
Old Posted Feb 8, 2018, 8:03 PM
littlewenzi littlewenzi is offline
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Mortgage options for self employed

Hi guys, kinda stuck in a situation. Want to know what is the best course of action and mortgage broker seems a little fishy, so want to make sure this is really my only option at this time.

1. I own a business, incorporated. I am sole owner
2. Profit average $190k/year for past 2 years
3. Revenue average $1.5mil for past 2 years
4. I did not take any dividend out past 2 years
5. I took salary of $39000 combined for both year (so, T4s)
6. I dont have any loans
7. Business been around for about 18 years

What is the best way to get mortgage for a home?
CIBC allow me to loan 600k, but 600k dont go very far in vancouver.

I have a mobile mortgage broker offering credits to my scenario, however, the interest is at around 5.5%. Since i want to buy something in the $1-1.2 mil range, the interest really adds up fast.

The cibc rate is like 3.1%
Both rates are based on 3 yr fixed

My personal income is basiclly useless in this case. But I figure with my business income, it would be ok with the big 5. seems not really.


Thanks a bunch.
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  #2  
Old Posted Feb 8, 2018, 8:35 PM
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Marty_Mcfly Marty_Mcfly is offline
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What's the cheapest suburb in the Vancouver area? What are house prices like in that area? Also, what do you currently have for a downpayment?

39,000 a year definitely doesn't go far in Vancouver. I'm surprised that CIBC would pre-approve you for 600k, but I'm guessing Vancouver is a completely different animal than anywhere else. In comparison, myself and my girlfriend have a combined household income of between 90 and 95k, and the banks told us we could "afford" a mortgage of 400-500k at 2.99%, though in reality 300k would be the top of our affordability. St. John's and Vancouver are completely different though.

5.5% interest is insane . On over a million you'll be paying interest forever.

God, how does anyone afford to live in Vancouver?? I literally can't understand it.

EDIT: Upon further thought about your finances and the housing market in Vancouver, I've come to the sad realization that I don't think you can afford a home in Vancouver. You'll immediately become house poor.

Last edited by Marty_Mcfly; Feb 8, 2018 at 10:19 PM.
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  #3  
Old Posted Feb 9, 2018, 12:46 AM
littlewenzi littlewenzi is offline
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Quote:
Originally Posted by Marty_Mcfly View Post
What's the cheapest suburb in the Vancouver area? What are house prices like in that area? Also, what do you currently have for a downpayment?

39,000 a year definitely doesn't go far in Vancouver. I'm surprised that CIBC would pre-approve you for 600k, but I'm guessing Vancouver is a completely different animal than anywhere else. In comparison, myself and my girlfriend have a combined household income of between 90 and 95k, and the banks told us we could "afford" a mortgage of 400-500k at 2.99%, though in reality 300k would be the top of our affordability. St. John's and Vancouver are completely different though.

5.5% interest is insane . On over a million you'll be paying interest forever.

God, how does anyone afford to live in Vancouver?? I literally can't understand it.

EDIT: Upon further thought about your finances and the housing market in Vancouver, I've come to the sad realization that I don't think you can afford a home in Vancouver. You'll immediately become house poor.
looking at suburbs (surrey/tri-city). A single detached home around 1mil and a bit in surrey. a duplex around that price in the tricity.
CIBC was looking at my business income as well.

but ya, I can pay around $5000 for mortgage, but at 5.5%, it will be more than that, and a lot of interest.

I have 20% down
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  #4  
Old Posted Feb 9, 2018, 4:42 AM
sunsetmountainland sunsetmountainland is offline
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Quote:
Originally Posted by littlewenzi View Post
looking at suburbs (surrey/tri-city). A single detached home around 1mil and a bit in surrey. a duplex around that price in the tricity.
CIBC was looking at my business income as well.

but ya, I can pay around $5000 for mortgage, but at 5.5%, it will be more than that, and a lot of interest.

I have 20% down
You need to look at a mortgage broker as well as credit unions. Give yourself as much options for your loan I do not see it being a problem they will want your money!

What do you find fishy about a mortgage broker they are way more flexible give you rates on all the banks as well as mortgage companies I have been using mortgage brokers for years they get the best rates. I have been using my broker for over 25 years she does all my houses. She is in Nanaimo because that is where I lived when I first used her but I have had a great relationship with her. If you personal message me I can give you her phone number. I am certain she would be able to help you.
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Old Posted Feb 9, 2018, 4:55 AM
sunsetmountainland sunsetmountainland is offline
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Quote:
Originally Posted by Marty_Mcfly View Post
What's the cheapest suburb in the Vancouver area? What are house prices like in that area? Also, what do you currently have for a downpayment?

39,000 a year definitely doesn't go far in Vancouver. I'm surprised that CIBC would pre-approve you for 600k, but I'm guessing Vancouver is a completely different animal than anywhere else. In comparison, myself and my girlfriend have a combined household income of between 90 and 95k, and the banks told us we could "afford" a mortgage of 400-500k at 2.99%, though in reality 300k would be the top of our affordability. St. John's and Vancouver are completely different though.

5.5% interest is insane . On over a million you'll be paying interest forever.

God, how does anyone afford to live in Vancouver?? I literally can't understand it.

EDIT: Upon further thought about your finances and the housing market in Vancouver, I've come to the sad realization that I don't think you can afford a home in Vancouver. You'll immediately become house poor.
You can look at it two ways because lots of people in Vancouver and area are very rich because of their houses. I bought a houses in 1996 for 94,000 in Nanaimo I used the equity in 2004 to buy another then another etc.. I have many houses in the lower mainland as well as Nanaimo.

I started small then worked my way up it is not rocket science.
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  #6  
Old Posted Feb 9, 2018, 6:36 AM
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1ajs 1ajs is offline
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hows work if the company bought it? and u rented it back from it with a agreement of rent to own?
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  #7  
Old Posted Feb 9, 2018, 3:41 PM
casper casper is offline
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Look at Vancity.

The big banks don't put number into a computer program and generate an answer. A credit union is more likely to look at the bigger picture.

Mortgage brokers are not bad. They basically, take two or three lenders and get them to bid against each other for your mortgage. You would sign papers with the winning bank/lender not the broker.
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Old Posted Feb 9, 2018, 5:15 PM
Pinion Pinion is offline
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Quote:
Originally Posted by Marty_Mcfly View Post
What's the cheapest suburb in the Vancouver area? What are house prices like in that area? Also, what do you currently have for a downpayment?
Whalley in Surrey is the cheapest, and the cheapest listed house there is $759,000. It has no interior photos and is being advertised as a teardown: https://www.rew.ca/properties/R22060...reet-surrey-bc

Quote:
ATTENTION BUILDERS & INVESTORS!! Great Holding/Rental Property. Central location, Potential to build 3 storey (confirm with City of Surrey). There will be a nice view North Shore mountains on new build. This Split level 1100sf house comes with 2 bedroom and 1 bath. 25x10 side patio with river rock BBQ. Living room features oversized French doors onto 30x8 deck, enjoy the sunsets, the city and mountain views. Main loft area has skylights and huge WI closet. Roof 2005. Walking distance to Skytrain. Excellent property to live in now and build in future. Terrific opportunity to build a new family home in a great neighbourhood. Seller motivated bring all offers.
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  #9  
Old Posted Feb 10, 2018, 3:59 AM
sunsetmountainland sunsetmountainland is offline
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Quote:
Originally Posted by casper View Post
Look at Vancity.

The big banks don't put number into a computer program and generate an answer. A credit union is more likely to look at the bigger picture.

Mortgage brokers are not bad. They basically, take two or three lenders and get them to bid against each other for your mortgage. You would sign papers with the winning bank/lender not the broker.
What do you mean two or three lenders for mortgage brokers? Try like 10-15 including all the regular banks.
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  #10  
Old Posted Feb 10, 2018, 5:16 AM
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Quote:
Originally Posted by 1ajs View Post
hows work if the company bought it? and u rented it back from it with a agreement of rent to own?
If it's the same as having a company vehicle, the house becomes a taxable benefit and his income tax would skyrocket. With a $2,000 a month "rent" payment (which is probably an underestimate for his case) they would tax his $39,000 income as if it were $63,000. He's paying $5,564 in taxes right now which is about 14.3% of his income, but throw in that taxable benefit at $24,000 a year and he has to pay $11,951 in taxes which is over 30% of his income—more than doubles his tax rate. He most likely has other forms of income but he didn't mention them. And sometimes taxes don't look at what you're paying, but what the value of the thing is, so he might get taxed a lot more or a lot less.
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  #11  
Old Posted Feb 10, 2018, 5:54 AM
craneSpotter craneSpotter is offline
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Quote:
Originally Posted by littlewenzi View Post
looking at suburbs (surrey/tri-city). A single detached home around 1mil and a bit in surrey. a duplex around that price in the tricity.
CIBC was looking at my business income as well.

but ya, I can pay around $5000 for mortgage, but at 5.5%, it will be more than that, and a lot of interest.

I have 20% down
You probably need to report more 'taxable' income from your business to yourself to get a higher approval amount AND lower rate. Usually two years of higher income without as many (business) tax deductions. Otherwise you need to put as much down as possible - 20% down is a 'standard' mortgage (non-insured)...so you are almost there.
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