The Situation
The clients, common-law partners and Canadian citizens, had recently moved from Ontario and were buying their first home together, a two-bedroom, two-bathroom condo with parking near rapid transit in Metro Vancouver, for about $860,000. The building sits on government leasehold land with a lease extension in place to 2066; the seller was completing the extension and its cost, about $123,000, was already in the price. One client worked in government IT for about 20 years before incorporating in 2021 to do the same work as a contractor, and had invested most of the income since; the other is a Red Seal mechanic turned service advisor at a car dealership earning about $84,000, who had run up debt in the move and paid it off.
The Challenge
Leasehold condos narrow the field of lenders and insurers, and a lease extension being completed by the seller has to be documented so the insurer sees a term that outlasts the amortization. The contractor's income was two years incorporated with a partial first year, which cuts the two-year average, and the second client's file carried two collections they had not known about, with a score of 623.
The Solution
We placed an insured purchase with a major bank, a prime lender: the incorporated client's income was taken as the two-year average of T4s from the corporation, about $146,000, the collections were paid in full and documented before the file went in, and the lease extension was evidenced from the seller's side so the 2066 term stood. With 10% down from investments of about $1 million and the mortgage insurance premium added to the loan, the mortgage was about $798,000 at 90% loan-to-value on a five-year fixed term at about 5.2% in 2024, with a 25-year amortization; the debt-service ratios sat at 33% and 38%.
The Outcome
A first home in BC at insured bank pricing, a lease that runs decades past the mortgage, and a credit file cleaned up before the lender ever saw it. Leasehold is not a reason a purchase fails; an undocumented lease is. The difference is paperwork, done in the right order.