Client overview
Client Situation Overview
The Smith family, self-employed digital marketing consultants who recently relocated to Quebec City, aimed to purchase their dream home but faced challenges securing traditional mortgage financing due to irregular income and limited local credit history.
Challenges Faced
- Irregular Income Streams: Their self-employment resulted in fluctuating monthly income, complicating traditional income verification.
- Limited Credit History: Only a 6-month local credit history since relocating from abroad.
- Time-Sensitive Purchase: The desired property had multiple competing offers, requiring expedited financing approval.
Client Profile
Name: The Smith Family
Age: 35 (Mr. Smith), 33 (Mrs. Smith)
Industry/Occupation: Self-Employed Digital Marketing Consultants
Location and Address: - Immediate homeownership without disrupting their business operations. - Potential property appreciation in a growing Quebec market.
Age: 35 (Mr. Smith), 33 (Mrs. Smith)
Industry/Occupation: Self-Employed Digital Marketing Consultants
Location and Address: - Immediate homeownership without disrupting their business operations. - Potential property appreciation in a growing Quebec market.
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Financial and Lending Details
Loan Purpose and Goals:
Purpose of the Loan
To secure a mortgage for purchasing a residential property valued at CAD 800,000.
Client's Goals
- Obtain swift mortgage approval to purchase their desired property.
- Establish a local credit footprint to facilitate future financing.
Expected Benefits
Quebec City, Quebec
Credit and Financial Health:
Credit Score
- Mr. Smith: 655
- Mrs. Smith: 660
Credit History
Limited Canadian credit history due to recent relocation; previous international credit records demonstrate responsible borrowing but are not fully recognized by local lenders.
Monthly Income
Average gross monthly income of CAD 18,000, ranging between CAD 12,000 and CAD 25,000.
Financial and Property Details:
Portfolio Value
$800,000
Loan-to-Value (LTV) Ratio
70% LTV (CAD 560,000 loan on a CAD 800,000 property)
Current Condition of Property
Move-in ready with no need for immediate renovations.
Appraised Value
$800,000 (as per certified appraisal report)
Existing Debts and Obligations
- Business Line of Credit: CAD 50,000
- Credit Card Debt: CAD 5,000
Other Funding Sources
- Down Payment: CAD 240,000 from personal savings
Lending Solution
Lending Strategy and Loan Details
Amount Financed
$560,000
Repayment Plan
- Interest-only payments for 12 months.
- Plan to refinance with a traditional lender after 12 months, leveraging improved credit history and increased property equity.
Loan Term
12 months
Interest Rate
10.99% per annum
Monthly Payment Amount
Interest-Only Payment = (CAD 560,000 * 10.99%) / 12 ≈ CAD 5,129 per month
Return on Investment (ROI)
Not directly applicable for the borrower; however, anticipated property appreciation of 5% over 12 months increases property value to CAD 840,000, adding equity.
Implementation Process
Approval Process Steps
1. Initial Consultation: Assessed financial situation and objectives.
2. Documentation Collection: Gathered income statements, bank statements, and credit reports.
3. Property Appraisal: Expedited appraisal confirming market value.
4. Underwriting: Evaluated the Collateral, Capital, Capacity, Credit and exit strategy with consideration of refinancing plans.
5. Approval and Funding: Issued offer for financing and funded loan within 7 business days.
Funding Timeline
Completed funding in 7 business days to meet the seller's deadline.
Customized Solutions
- Interest-Only Payments: Lowered initial monthly payments to accommodate income fluctuations.
- Flexible Underwriting: Considered international credit history and alternative income verification.
Results and Impact
Results achieved
Products used: Private Residential Mortgage Loan – Short-term financing for clients with unique financial situations, offering quick approval and customizable terms.
Interest-Only Loan Structure – Allows for lower monthly payments by paying only interest, with principal repayment deferred to loan maturity.
Apply Now!Interest-Only Loan Structure – Allows for lower monthly payments by paying only interest, with principal repayment deferred to loan maturity.
Achievement of Client Goals
- Successfully purchased their dream home without delay.
- Established a local mortgage payment history to improve credit standing.
Impact on Financial Position
- Preserved cash flow due to reduced monthly payments.
- Positioned for refinancing at potentially lower interest rates after 12 months.
- Gained equity through property appreciation.
Conclusion
Let's recap
By tailoring a private mortgage solution at a 10.99% interest rate with interest-only payments, we enabled the Smith family to secure their dream home swiftly, overcoming traditional lending barriers.
This case exemplifies our commitment to providing flexible, client-centric lending solutions, particularly when conventional financing is unattainable.
This case exemplifies our commitment to providing flexible, client-centric lending solutions, particularly when conventional financing is unattainable.
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