As your trusted mortgage broker in British Columbia, I’m excited to share some often-overlooked tips and policies that could make a significant difference in your borrowing power. These policies, sometimes buried in the fine print, can be a game changer for your financial goals. Let’s dive into the top 7 policies that might just give you the edge you need:
- Existing Home Equity Line of Credit (HELOC) Qualifying Payment: Many lenders use the full HELOC balance when determining your eligibility for a new mortgage. There are still lenders that will use your balance usually amortized at 25 years. This will significantly enhance your borrowing power compared to lenders using the full limit especially if you are not carrying or only have a small balance.
- Child Tax Benefit: The number one reason I ask if you have any dependants on the application is so I can use any child tax benefit you might be receiving and add it to your income. Keep in mind that majority of lenders will allow us to use child tax benefit for kids up to 13 years old. There are some lenders that will use this benefit until the dependant is 15 years old.
- Business for Self: Incorporated Borrowers: With a good beacon score, there are lenders that will waive the requirement for Business Financials, streamlining the process for eligible borrowers.
- Business for Self: Sole Proprietorship or Partnership: Some lenders will allow to use a 15%-20% gross-up of net income. Depending on the mortgage and lender we may also be able to add back some expenses to income.
- Variable Income: If your income is increasing annually, the most recent 24-month average can be used, offering flexibility for those receiving bonuses or experiencing income growth.
- Non-Subject Rental Income: Non subject means an alternate property that you already own- not the one that currently needs financing. Some lenders will use a higher rental calculation than others and some omit property-related expenses from the Debt Service Ratio calculation. This is favourable as the more income we can use from the property the stronger the overall application.
- Gross-Up of Non-Taxable Income: Some lenders allow us to gross up non-taxable income like Disability Income or Indian Act Exempt income. Gross up is allowed if there are other sources of income.
There are some of the policies that have made an impact on my client’s files in the past. You can be sure that we will explore all options with appropriate lenders to find you the best fit. Understanding and utilizing these policies can unlock greater financial opportunities for you. Reach out and see how you can achieve your homeownership dreams & get on the path to mortgage success.
