The Situation
The client moved to Canada four years ago and a year later bought a large detached home in Metro Vancouver. With no Canadian income history, the purchase was financed privately at over 11% on interest-only payments. At about the same time the client opened a café that has since become a local fixture, with hundreds of reviews averaging 4.6 stars, and a year later a second company that is half café and half supplier to other coffee shops. Credit was clean throughout, with a score of 768, and the client held about $1 million in cash and equipment.
The Challenge
The client declared next to nothing in personal income, and even the two corporations' financial statements were not strong enough to qualify on; the income was real, but it lived in the businesses' bank accounts. One company was under two years old. A jumbo mortgage on a $7.5 million home is a small club of lenders, and most want two full years of financials for each company. Meanwhile the private mortgage was costing more than $30,000 a month in interest alone.
The Solution
We qualified the file on business cash flow and nothing else: twelve months of bank statements for each company, about $1.15 million and $1.2 million gross, less the lender's expense allowances, gave a combined stated income near $880,000. A major alternative lender approved it, the largest stated-income declaration it had written for a single borrower on two corporations, an unofficial record at that lender. At about $3.7 million on an appraised value of $7.5 million the loan-to-value was 49%, which brought the jumbo premium down and let the file carry a 30-year amortization at a rate just over 6%. The new mortgage paid out the private lender, a vehicle loan, a lease and a card balance.
The Outcome
The monthly mortgage payment fell by about $14,000. A year and a half later the same lender renewed the mortgage at under 5%. With the liabilities brought down, the family also completed two presale condo purchases through alternative lenders, approved under specialty programs on the same business cash flow. A newcomer's path is usually three steps: private while the income is being built, alternative once the bank statements prove it, and a bank when the tax returns catch up. This file is two of the three, and on the way to the third.