Mortgages can seem complicated—particularly for those of us who don’t fit into the traditional “cookie cutter” type approval process. Fears of possible rejection by lenders or inaccurate advice can all lead to fear of the big “M” word.

Let’s address a few concerns and hopefully mitigate some of the stress or anxiety you may be facing in purchasing or refinancing a home.

Typical income scenarios

1. Base Salary Plus Tips

Yes, you can get a mortgage if your salary is comprised of a base salary plus tips. An example of this would be restaurant service staff. The assumption here is that the tip amount cannot be proved, but if you fall into this category, we are able to take your base salary and then add a reasonable amount for tips. This combined income amount is then used to qualify you for a mortgage.

2. Self-employed and 100% Commissioned

Yes, you can get a mortgage if you are self-employed or working 100% on commission. This type of scenario is similar to the above. Regardless of what you are claiming on your “Notice of Assessment” to Revenue Canada, we would estimate a reasonable income amount based on your career. It is this “stated” income amount that we use to qualify you for a mortgage and not the income amount reported in the Notice of Assessment.

3. Pension Income

Yes, you can get a mortgage if you are retired and only have pension income. Note: The pension income must be able to service the loan—if not, you should consider a co-signor or a larger down payment. All other requirements, such as credit worthiness of the client and condition of the subject property, are the same.

4. New to Canada

Yes, you can get a mortgage if you are a newcomer to Canada. There is a very flexible mortgage product that’s perfect for those who have recently arrived in our beautiful country and who may not necessarily have a Canadian credit history. In this scenario, you confirm your credit history by providing documentation showing payment of rent, utilities or cable bills.

Typical purchase and improvement scenarios

1. “Purchase Plus Improvements” Mortgage

If you are considering a purchase of a new home but want to add your own personal touch to the property, consider a “Purchase Plus Improvements” mortgage.

The first part of the mortgage is the purchase of a home, which is handled in the normal way. In the second part of the mortgage, you assign a dollar value that you want to add to the mortgage to cover the costs of your home improvement. This value is typically derived from quotes that you’ve received prior to the purchase of the property.

Let’s take the example of a garage, which we will say costs $15,000 to build. On the date of possession, the lawyer distributes the monies normally but holds back the $15,000 amount assigned for the improvements. Once the garage has been built, and following a quick inspection by an appraiser to confirm the improvement has been completed, the lawyer releases the remaining funds to the client.

2. Purchasing a Residential Property with a Company Name

Yes, a company can purchase a residential property; however, it’s important to note that not all lenders will accommodate this type of mortgage. The owners of the company need to be included in the application process, which would involve reviewing the credit worthiness of each individual. At closing, a lawyer arranges for the company’s name to be registered on the title as the owner of the property.

If you have a question or situation you want to discuss in further detail, contact us. We will be glad to feature common questions and concerns in future articles.

Matthew P. Buxton
Matthew is an independent mortgage broker, a member of the Real Estate Council of Alberta and is the owner of Alberta Mortgage Solutions Inc.. He can be reached at (403) 836-2674. For more financing advice, or to find out your chances of getting a mortgage, visit his website at www.abmsi.ca

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