Ideally in Ontario. Just had a couple of quick questions I'm trying to get my head around stuff online before going in person and meeting with someone.

if you allow them to speak, they will rip you off and blame it on you.

I recently bought a house in Ontario, ask your questions and we'll see what we can do..

I too recently bought a house.
Although I don't work in those areas directly my prior job dealt with that stuff.
As several of us and compare the answers:P

i have a mortgage :(

ask me anything!

q: is it fun paying your mortgage, trife?

a: no sir, i dont like it

I used to work in mortgage banking, now I work in a regular bank. Unfortunately not in USA, because then it would have been lots of fun for Trife to make his payments straight to my pocket.

1. Determine what you can afford, not what the bank tells you they will lend you. The mortgage availablity formula is silly.
2. Only look at houses that are in your budget. Looking at more expensive houses will only make you want them and encourage you to get your "max mortgage"
3. Choose the cheapest house in the best area. Location is the number one factor for house appreciation. It drives everything so think about it. What schools are nearby is also a factor.

No disrespect to americans but don't use them for advice here because our rules are *very* different than theres (I like theres better though:P)

Calculate how much mortgage will cost you if interest rates go up 2% and if you can still afford that should it happen. That's pretty much the acid test. Those lucky bastards to the south of us have many more ways out of a mortgage than we do.
Also DO NOT mortgage a house where you are living with less than 20% down. If prices fall the bank could potentially make you pay $$$ or force you to sell.

:P

My question is more around how lenders evaluate fluctuating income. I know they look at tax returns over the past 2 years and average that amount. My question is what type of current income documentation they need. For example, if I were to buy a house today, they would look at our 2012/2013 tax returns. What if our 2014 income is higher? What if it's lower? Will they ask? Do they care? What if we purchased a house in January? Will that then erase the 2012 return and trigger 2014 income? What if we don't file until April? What substitute will they take if we don't have a 2014 tax return until April 2015?

Also - say I have a small private business that's incorporated. Can assets in that business in any way increase the personal mortgage I could get? Can liabilities within that business negatively affect me as an individual?

Assets in a corporation will not be counted only the salary you draw. Otherwise wtf is the point of being incorporated?

"My question is more around how lenders evaluate fluctuating income. I know they look at tax returns over the past 2 years and average that amount."
They might. Depends on how close you are to your borrowing limit. I got a mortgage back in March and they only needed a letter of my employer as proof of income. Didn't ask for tax info. Even qualified for a <20% down mortgage (CMHC) first but decided against going that route.
They have the right to ask you for your last two years of tax returns. They won't ask for your current income typically only proof of employment. IF you tell them that your income is substantially different (higher) they'll want a letter from your employer assuming that you need that extra income to qualify for the higher loan.

FYI: your income level doesn't affect your rates, your credit score does. The fact that you earn more than last year has no baring on the rate they will give you but only if you borrow more. IF you purchase in January you can use your last year's tax return and a letter of employment/income from your employer for this year. They do take the type of job you have into consideration (ie is it regular income and how your peer group does with mortgages).


If you can get ahold of fooglemog, he works for a bank and is probably your best source for this stuff should you stump me and others on this forum:P

Your situation is what mine was in march. I hadn't filed my taxes for 2013 year (and hence had no return). They do know this hence the letter. With your permission they have the power to verify all these things anyway should they so chose.




"Also - say I have a small private business that's incorporated. Can assets in that business in any way increase the personal mortgage I could get? Can liabilities within that business negatively affect me as an individual?"

(I am not a lawyer but this is my understanding): The business is it's own legal entity. You can use the value of your shares in that business (and any income stream paid to you) to increase the amount of mortgage you can get but I would be very careful about that because by doing that. The bank will probably ask for detailed info on your business and business plan and probably won't count that income the same way it counts employment income. The liabilities cannot if it is incorporated (and not a proprietership). The people with the claim on those liabilities can only come after your business and not your personal wealth. However those liabilities affect the value of your shares in the corp already so in that sense yes.

Are you drawing a regular salary from that business? if so you can use that income also towards a mortgage.

My own personal view on doing something like this is make absolutely sure you understand what you are risking if you chose to go that route. Buying a house is not really a pathway to financial wealth, especially in these parts at this time. Run this through your head: what happens if interest rates go up by 2-3% and your housing price drops by ~20% over 2-3 years. Will you be in trouble?

I hope that helps.

Yeah, I understand that... what I'm asking is if they can be used as collateral.

The business part is more of a curiosity thing. We're nowhere near big enough yet to make incorporating worth it.

As for the income - as supply teachers we don't have a fixed salary so all the employer can say is what our daily rate will be, but can't give any guarantees for number of days etc. We also have income from several other sources. For that type of worker they'll usually average the last 2 tax years to get an idea of what you're earning. Our mortgage broker mentioned that after January they may want to see 2014 numbers, but I'm not sure if others have experienced that, or how I'd get those numbers.

theirs....just sayin

Hawkeyee, does Canada not offer you some sort of form at the end of the tax year to tell you your total earnings?

Riddler: http://mtcowgirl.com/.../uploads/2014/01/c171.jpg

And no. You get one tax form per source of earnings (and one for each job) for most of them but not for any self-directed investments or your own business.
After you file tax you get a form back (which is what the bank can ask for) that states that your total income for the year XXX was YYYY, your refund (or balance owing) is zzz and some other info about how much you can contribute towards your retirement from pre-tax earnings in the following year. It also says they reserve the right to ask for supporting documentation and may make further inquiries and points out any corrections they made to your form.

:P

Don't you canucks have to pay like 20% tax or something ridiculous. Like a moose tax. Or providence should be called state tax. Or eradicate all French Canadian tax?

I was up there for work and had a group of guys complain about it to me.

You know. Right before I stole their money and wives.

I really would go and talk to someone in person (multiple people even). Not sure how it is there but at least in the states they don't charge for a consultation. I was lucky enough to have a great friend who owns her own mortgage lending company, but I still asked a lot of questions before I trusted her with my monies. Now I always go back to her when I am looking to buy or refinance.

thats a tax i can get behind

Just fine a place you can afford easily and then spend even less!

Q: Is it within the number of fingers you have on both hands the same mortgage company you pay the check to?

a: sadly, no