The Situation
The client, a doctor of psychology running an established practice, had recently separated and sold the family home, splitting the proceeds evenly. That half, with savings, a GIC and other accounts, made up a down payment of about $900,000 on a condo priced at roughly $1.28 million. The mortgage needed was about $380,000, under 30% of the price. Credit was excellent, above 800.
The Challenge
The practice paid the client about $82,000 a year, with the rest retained in the corporation. On standard debt-service arithmetic that salary produced ratios near 49% and 65%, far outside the limits, even though the client had just put $900,000 down and still held about $290,000 in a GIC. A lender reading only the income line would have declined a borrower with nearly $300,000 still in the bank after a $900,000 down payment.
The Solution
A major bank, a prime lender, offers a net worth lending program: where a borrower's liquid assets after closing are substantial, the file is qualified on net worth rather than on debt-service ratios alone. We documented the sale proceeds, the GIC and each account to the dollar, showed the corporation's retained earnings as supporting evidence, and presented the file as what it was: a self-employed professional with 70% down and nearly $300,000 in reserve. The lender approved the residential mortgage at about 30% loan-to-value on a five-year adjustable rate at bank pricing.
The Outcome
The condo completed on schedule, with a mortgage of roughly $380,000 at prime pricing and the client's reserves untouched beyond the down payment. For a separated professional starting over, the point was not the rate. It was that a bank read net worth as the measure of the file, which is exactly what a high-net-worth program is for.