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5 Mar



Posted by: Tracy Luciani Price


Mike owned a house and in moved his girlfriend Susan. After a year and a bit they bought a newly built home and ported his existing bank mortgage to the new property.  

Within two months he and his girlfriend decided to part ways. He agreed to buy her out so that they did not have to continue to live together and made a deal to pay her $30,000. 

The bank told Mike he did not qualify on his own because his income was too low.  Because they had a fixed rate mortgage instead of a variable, the bank penalty was excessive at  $14,756. It would have been only $2,400. with a variable.  

Mike came to us and we went to work. At first blush his debt service ratios were too high and there did not appear to be a deal. We had to get ‘creative’ to find a solution that would work, so we crunched numbers that would work. The result was that the loan needed to be reduced and we also needed to get him a 35 year amortization (the bank used 25 years). We then advised MIke that if his girlfriend paid half the penalty (which is fair) to reduce the required loan amount (and debt service ratios) then we might have a chance of getting it approved. 

Because we have so many lenders, some of who will stretch guidelines when credit is excellent, (which it was) and they value our relationship with them and the volume we send them, they will be more flexible with our deals.  

We did need to shop and plead Mike’s case to 3 lenders. We were successful in securing a lower rate and monthly payment (even with the added penalty) than what Mike previously paid to the bank. 

The moral of this success story is that we were able to turn a bank ‘NO’ into a ‘YES’.  Fortunately since Mike had ported his old mortgage and not obtained a new bank purchase mortgage, we were able to help him. If he had had a new collateral mortgage he would have absolutely stuck with no options until maturity. 

This is a great real life example of the value of our service versus the banks. It also gives validation as to why the new bank collateral mortgages should be avoided because life circumstances like this cannot be planned. It also points out another reason for going variable mortgage versus fixed rate which the banks push for all too obvious reasons.