How to get second Mortgage with really hight DTI ratio?

10 Replies

Hello everyone, my name is Lee Xing and I am still very new to REI, and looking to connect with the BP community in GTA. My current situation is my Mom and I together have a mortgage with CIBC with 920k balance left, and the purchase price of the SFR (my current primary residence) I own is 1.48M. My annual income has two parts 90k from full-time job plus 36k from my own incorporated company. It seems like it will be impossible to get a second conventional mortgage from any banks for me giving my current situation. Any advice or suggestion is appreciated.

@Lee Xing The house you currently have is way too much for what you make and want to do. You bought a really nice house and it tied up ALL your future resources for it. I dont know how the specific numbers wash out but i dont see how you could have much wiggle room. How can you show a bank a bank that you can afford both mortgages by yourself and with some margin to account for bad months? Also know that even though you split that mortgage. The bank will not account for it that way. A bank will count all your debts as your own because in the event of default they omly have you as a guarantor. You may have to put Mom on the new mortgage to assist as well. What is your total dti currently per the lender? Hpow far from 50% are you? What is the price and profitability of the next home?

@Alexander Felice appreciate you reply! That is what I am thinking too..... When I bought this house, I didn't think much, and just followed the old school principle from my parents: 'your primary house will be your best investment in life'. Now it really tied up all my resources..... I am planning to sell it sometime in the future depends on the market, but that is not what I can control for now. So I am trying my best to figure out what to do before this situation change. To answer you question, my total dti is around to 62%

@Lee Xing

don't sweat it, almost everyone makes that mistake. The world says your house will be the biggest purchase you ever make, and you best investment, and we all believe that.

So we go out, and we stretch to buy this giant liability and it sucks up all our resources and then one day we say "hey, my ambition is bigger than just one house, what else can I do?" and the answer is not a fun one.

I say sell your house when you can. You'll need to around a (rolling) 45%-50% DTI to buy investment properties, so you're essentially forced to choose between the two.

There is always the option of funding everything through private lenders but while that SOUNDS better, it's actually going to be more difficult than just making the sacrifice of selling. Though if your present situation is not expected to change, that's the angle to chase.

good luck my friend!

@Lee Xing one option is to go straight to commercial . As they tend to have slightly more flexible lending standards. They look more to see if the property can Service the debt normal 1.5X debt servicing. Though jumping straight to commercial loans might come with other risk.

@Lee Xing I'm guessing that between your job and business you don't have a lot of free time, but you do have a bit of money. So I would suggest kicking off a small direct mail campaign. Send out somewhere around 500 postcards a month to MLS listings in a radius around where you live, offering to take over their payments. Average home price in Markham is $834k so I would target houses in the $650k-$1m price range.

You should get a 10-20% response so that's 50-100 leads a month and from that, depending on how skilled you become at closing, you should be be able to pick up several properties a year without having to qualify for the loans.