Hey all. Had a question regarding debt service ratio and the changes that were made back in April, 2010.
I current own a property in Kitchener which was purchased last year for $324,000 with 5% down and has a current outstanding balance of $313.5K. It's owner occupied, and it is a rental propery generating $1750/month. I undervalued the cost of my unit for rent. If my current tenants choose to leave after their lease is up(the fall), I fully intend on increasing my rents to approximately $2400/month, depending on the supply/demand and interest.
I intend on purchasing a 2 bdrm condo within Kitchener either later this year or early next year with intentions of renting it. I will be looking at purchasing in the $135,000 range, with an LTV of 80% or less if I have the finances at that time. It should respectably average $900-1100/month rent. Now I should mention here that I intend on, if possible, implementing the Smith Manoeuvre on this property, which would require a readvanceable mortgage.
I would estimate I earn $40,000/year ballpark figure from my profession.
I have already been in contact with my previous broker(OMAC), who I used for the first property I purchased. I relayed all of these numbers and facts to them and they responded saying, "You will need to have an income of at least $49K/yr to qualify for a purchase of $140K with 20% down based on the current information that you have given me. If your tenant moves out and you can increase your rent on that property then the income can be $45K/yr". Would the amount they specified constitute both my earned and rental income, or just earned?
I assume that their lenders do not allow the 80% or 100% offset for rental income. So what are my options from here? Private lenders?
I current own a property in Kitchener which was purchased last year for $324,000 with 5% down and has a current outstanding balance of $313.5K. It's owner occupied, and it is a rental propery generating $1750/month. I undervalued the cost of my unit for rent. If my current tenants choose to leave after their lease is up(the fall), I fully intend on increasing my rents to approximately $2400/month, depending on the supply/demand and interest.
I intend on purchasing a 2 bdrm condo within Kitchener either later this year or early next year with intentions of renting it. I will be looking at purchasing in the $135,000 range, with an LTV of 80% or less if I have the finances at that time. It should respectably average $900-1100/month rent. Now I should mention here that I intend on, if possible, implementing the Smith Manoeuvre on this property, which would require a readvanceable mortgage.
I would estimate I earn $40,000/year ballpark figure from my profession.
I have already been in contact with my previous broker(OMAC), who I used for the first property I purchased. I relayed all of these numbers and facts to them and they responded saying, "You will need to have an income of at least $49K/yr to qualify for a purchase of $140K with 20% down based on the current information that you have given me. If your tenant moves out and you can increase your rent on that property then the income can be $45K/yr". Would the amount they specified constitute both my earned and rental income, or just earned?
I assume that their lenders do not allow the 80% or 100% offset for rental income. So what are my options from here? Private lenders?