View Full Version : Chances of buying a house if you already own one?
I'm buying a house with a friend and she has already bought/sold one house and now owns a second house in Barrie, Ontario that she's renting out. She's owned it for 5 years already so she's renewing her mortgage this week but we're trying to put an offer in on another house here in Calgary (my first house) within the next 2-3 days. My credit is fine, we both have average jobs, do you think her other mortgage will make it a lot harder to get approved for this one? Will it affect it negatively at all?
I could just wait to see what the broker comes back with but I'm too nervous to wait. Wondering if anyone else has past experience with it.
dr_jared88
05-19-2009, 12:57 PM
Way too many variables for us to be able to predict whether or not you will be approved.
barmanjay
05-19-2009, 01:47 PM
talk to a professional - mortgage broker
they can run through all the best scenarios for you guys, your scenario is specific to you.
Xtrema
05-19-2009, 01:48 PM
How's her credit? Sometime lender based on the worse of the 2 for approval to cover their ass. Because nothing can stop joint applicants from leaving and the place defaulted.
Sorath
05-19-2009, 01:55 PM
personally i would never buy a house with a friend, unless its ur significant other. but as long as she declares the rent as income she shouldnt have a problem. because its all about the dsr.
BlackArcher101
05-19-2009, 02:24 PM
Is she going to live in the house you are purchasing?
bspot
05-19-2009, 02:49 PM
If you find a shady enough lender you can claim up to 80% of her rental income which would help a lot. If the rental is illegally suited though you can only claim one renter (your upstairs since it's worth more).
Originally posted by BlackArcher101
Is she going to live in the house you are purchasing?
We both are.
Originally posted by bspot
If you find a shady enough lender you can claim up to 80% of her rental income which would help a lot. If the rental is illegally suited though you can only claim one renter (your upstairs since it's worth more).
It's not zoned for a suite so we're thinking of putting a bathroom in downstairs and renting the place as a downstairs bedroom while the renter will have unlocked access to the rest of the house as well as use of the kitchen. Are you saying we should claim the top level as a rental unit and say we're living downstairs?
AndrewMZ3
05-19-2009, 07:19 PM
Even if you're cashflow positive on the rental property, the banks don't factor in 100% of the rental income, so it does make it slightly harder. Check with el-nino here on Beyond. He helped me get another mortgage while having a rental property.
I forgot to mention. She co-owns the property with her sister who is still living in the house and takes care of getting renters to cover her half. Would it matter if she's only on the hook for half the other mortgage?
BlackArcher101
05-19-2009, 10:14 PM
I think your best bet is to ask some in the profession. There's way too many factors coming into play here. Accountant and/or Mortgage broker?
TomcoPDR
05-19-2009, 10:45 PM
Talk to Dan, easy going guy to talk to.
http://www.danheon.com/
Well now the broker wants my notice of assessment from last year to prove I filed my taxes. Problem is I haven't filed taxes in 4 years so I got to track down T4 statements that are in a file folder 5000 kilometres from here. That and CMHC wants us to have had our downpayment in our bank accounts for at least 90 days to show stability. What kind of shoddy investor keeps $15,000 sitting in a chequing account for 3 months? All my money is being pulled from investments.
This property is going to be sold before we can even make an offer on it, I know it is.
Didn't you think that you'd need to verify income with lenders with the tightening of credit?
masoncgy
05-20-2009, 08:38 AM
Originally posted by Mar
Well now the broker wants my notice of assessment from last year to prove I filed my taxes. Problem is I haven't filed taxes in 4 years so I got to track down T4 statements that are in a file folder 5000 kilometres from here. That and CMHC wants us to have had our downpayment in our bank accounts for at least 90 days to show stability. What kind of shoddy investor keeps $15,000 sitting in a chequing account for 3 months? All my money is being pulled from investments.
This property is going to be sold before we can even make an offer on it, I know it is.
lol... you sound like the last person who should be investing in anything.
You haven't filed your taxes in 4 years? Why? Owe some money to the CRA or something?
Big deal on the CMHC's request... obviously you're going for a high risk mortgage, so why shouldn't the insurer be able to see where you're obtaining the downpayment from?
No one keeps $15,000 in a chequing account for 3 months... that would be stupid when it could be sitting in a high interest savings account making money.
Don't whine & complain because you're going to lose out solely on the fact you don't keep your finances in order.
Originally posted by masoncgy
You haven't filed your taxes in 4 years? Why? Owe some money to the CRA or something?
They owe me over $5000, never got around to it. Kind of negates my argument for investing but I just never bothered.
Originally posted by masoncgy
No one keeps $15,000 in a chequing account for 3 months... that would be stupid when it could be sitting in a high interest savings account making money.
My point exactly. But they want the funds to be sitting in your account for 90 days.
Originally posted by masoncgy
Don't whine & complain because you're going to lose out solely on the fact you don't keep your finances in order.
Whine? Complain? I'm looking for intelligent input from other people who have gone through the same situation as to what my options could be. Would you like me to rephrase my question or do you have anything constructive to add?
w_man
05-20-2009, 08:54 AM
^^ dude .. this is fairly standard.
The down payment doesn't necc. have to be in your chequing account ... it can be in your savings as well. It's quite simple really ... when you are asking for mortgage, you state your debt and your assets ... your investments can go towards your assets .. if you have to liquidate your assets in order to get a down payment, then the bank has to know this.
Think of it this way ... you could get your mortgage approved with all your debts and assets shown to the lender and when the time comes for you to make your down payment, you take out 15k from your credit card ... your debt/asset ratio changes.
As someone mentioned up top .. you could potentially go to another lender who has a higher interest rate and less requirements ... up to you.
masoncgy
05-20-2009, 09:45 AM
Originally posted by Mar
They owe me over $5000, never got around to it. Kind of negates my argument for investing but I just never bothered.
You're owed $5,000 from the CRA, yet you haven't bothered to go after it? lol... good one.
My point exactly. But they want the funds to be sitting in your account for 90 days.
It's called a savings account. Easy to show your downpayment sitting in high interest account.
Whine? Complain? I'm looking for intelligent input from other people who have gone through the same situation as to what my options could be. Would you like me to rephrase my question or do you have anything constructive to add?
Who's beaking because they don't feel you need to follow protocol?
Well... simply going off what's already been said, you don't keep your finances in order, and that's your responsibility.
Ie:
"I haven't filed taxes in 4 years" = Your problem.
"I can't show proof of downpayment" = Your problem.
Unless you can get around needing a CMHC-insured mortgage, you'll have to follow their rules. The same goes for the lender. If you want their rates & their money, you have to follow their rules, or go elsewhere and pay more.
ExtraSlow
05-20-2009, 10:04 AM
Your finances are a mess, and you haven't put any effort in to fixing them. I don't think I'd lend you money either.
The CMHC rules are pretty clear, and not onerous at all for someone who's organized.
Rat Fink
05-20-2009, 10:06 AM
.
Originally posted by Rat Fink
BS on the government owing you 5000 bucks.
I don't know anyone who would let the government get away with that. My guess is you aren't claiming some of your income and you'd have your ass handed to you. Are you sure you want to be buying a second property? Might raise some questions with the gov't that may spark an audit.
It's all legit, I did the same thing in 2005. I filed 4 years worth of taxes and got back $6500 they had owed me the whole time. I get tax credits for 100% of my student loan interest payments so I get all that back and over 4 years it's quite a lot.
I know where my money is, it's owed to me from taxes. I can claim it whenever I want, it's not a mess.
It's also not the point.
Rat Fink
05-20-2009, 10:47 AM
.
Xtrema
05-20-2009, 11:02 AM
Originally posted by Rat Fink
My friend owns 3 properties with her boyfriend. They have a house and 2 duplexs. She was an entry level accountant and he was a truck driver with a bankrupcy within a couple years of buying their units. All I know is they had to go outside of a bank to get the mortgage (from an independant agent). Around the time of buying those places, she was probably making around 40K/year and he was around 55-70K.
That may fly in 2006. Don't know about now.
AndrewMZ3
05-20-2009, 11:09 AM
Originally posted by Mar
This property is going to be sold before we can even make an offer on it, I know it is.
You can make your offer subject to financing. Also, I believe documentation of your investments should suffice for proof of down payment, but if you are planning to buy soon, it might be prudent to liquidate some of your holdings at this point (especially with the current rallies).
Are you self employed? I don't recall ever having to provide historical notices of assessment. An employment letter and last 3 pay stubs have sufficed in the past for me.
I am pretty sure the equity in the other property is negligible since they mainly look at cashflows.
Originally posted by AndrewMZ3
You can make your offer subject to financing. Also, I believe documentation of your investments should suffice for proof of down payment, but if you are planning to buy soon, it might be prudent to liquidate some of your holdings at this point (especially with the current rallies).
Are you self employed? I don't recall ever having to provide historical notices of assessment. An employment letter and last 3 pay stubs have sufficed in the past for me.
I am pretty sure the equity in the other property is negligible since they mainly look at cashflows.
No seller is going to wait 90 days for a financing condition to be lifted.
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