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Mortgage Pre-Approval


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#1 KD35

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Posted 07 March 2017 - 10:26 PM

Just wondering for those looking to buy a house before residency, any luck with getting pre-approval?

 

A couple of the banks I've talked to say I'll struggle to get approval until after starting residency due to no current income, which is fair but not the news I wanted to hear...


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#2 rmorelan

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Posted 07 March 2017 - 10:39 PM

Just wondering for those looking to buy a house before residency, any luck with getting pre-approval?

 

A couple of the banks I've talked to say I'll struggle to get approval until after starting residency due to no current income, which is fair but not the news I wanted to hear...

 

and who are you talking to at the banks? 

 

I had no issue with that


Our knowledge has made us cynical.
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More than machinery we need humanity.
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#3 blacktowel

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Posted 08 March 2017 - 12:15 AM

Was about to start a similar topic!

 

Starting FM residency, RBC in Alberta states they'll only cover 65% of the mortgage and only allow 10% of my LOC towards the downpayment. The other 25% I need to scrounge up from other resources - what? 

 

I also want to hear if others have/had better luck with mortgage pre-approval?



#4 rmorelan

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Posted 08 March 2017 - 01:09 AM

Was about to start a similar topic!

 

Starting FM residency, RBC in Alberta states they'll only cover 65% of the mortgage and only allow 10% of my LOC towards the downpayment. The other 25% I need to scrounge up from other resources - what? 

 

I also want to hear if others have/had better luck with mortgage pre-approval?

 

Errr me. They wanted 20% down (which is standard) and would go with a lower percentage than that but of course the mortgage insurance rules would then apply. This was not with RBC. 

 

I went through the same medical LOC person I was using before - in fact that is the entire point of a professional LOC manager. Some one that understand doctors, their training cycle and responses to our needs to keep our business. 

 

This is exactly why I kept the same LOC manager even when I moved away. These are professional relationships we are developing - and my banker now is a valued part of my circle of professionals. 

 

I mean I hate to ask again but who exactly are you talking to? 


Our knowledge has made us cynical.
Our cleverness, hard and unkind.
We think too much and feel too little.
More than machinery we need humanity.
More than cleverness we need kindness and gentleness.
Without these qualities, life will be violent and all will be lost.
-
Schulich Medicine 2013, PGY4 - Ottawa for Radiology

 

yoda.jpg


#5 KD35

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Posted 08 March 2017 - 02:09 AM

I've met with a mortgage specialist at RBC (where my LOC is) who told me I couldn't get anything until after I've started. Also spoke to one of the CMA-partners at National Bank and was told the same thing which surprised me.

 

Currently in the process of talking to a mortgage specialist at Scotia who has processed mortgages for dentistry students in the past, but am being told my approval amount would be quite low...



#6 rmorelan

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Posted 08 March 2017 - 02:31 AM

I mean it is always possible something has changed - if I could offer a suggestion if you haven't already is go directly through your professional LOC person. I view this very much like getting the LOC in the first place - you have to be talking to the right person or you are going to get the run around. 

 

if that still isn't working then ha I am going to investigate it further to see what if any new rules are place. 


Edited by rmorelan, 08 March 2017 - 02:32 AM.

Our knowledge has made us cynical.
Our cleverness, hard and unkind.
We think too much and feel too little.
More than machinery we need humanity.
More than cleverness we need kindness and gentleness.
Without these qualities, life will be violent and all will be lost.
-
Schulich Medicine 2013, PGY4 - Ottawa for Radiology

 

yoda.jpg


#7 blacktowel

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Posted 08 March 2017 - 05:54 AM

Errr me. They wanted 20% down (which is standard) and would go with a lower percentage than that but of course the mortgage insurance rules would then apply. This was not with RBC. 

 

I went through the same medical LOC person I was using before - in fact that is the entire point of a professional LOC manager. Some one that understand doctors, their training cycle and responses to our needs to keep our business. 

 

This is exactly why I kept the same LOC manager even when I moved away. These are professional relationships we are developing - and my banker now is a valued part of my circle of professionals. 

 

I mean I hate to ask again but who exactly are you talking to? 

 

Good point! The Mortgage Specialist was contacted through my branch and understands that I am a medical student, but they aren't the Medical Student Specialist I set up my LOC with. I just emailed that LOC specialist and will provide an update.



#8 mavrik13

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Posted 09 March 2017 - 01:41 AM

I ended up with a mortgage setup through my LOC specialist with Scotia. If I remember correctly, the down payment couldn't come from the LOC (I simply moved money from the LOC to my checking account for a few months, but even that is unlikely to be necessary. I knew this before the match). I seem to recall them needing some signed paperwork confirming I was going to be a resident (i.e. can't just print off the CaRMS website). That took a few weeks to get organized. I seem to recall being preauthorized for a ridiculously high amount, much higher than I'd ever consider as a resident (plus, looking at my current finances, I'm not sure I could afford the extra 200k I was preauthorized for).

 

As mentioned above, you need to talk with the right person. You won't get the same rates that people with 'normal' jobs will get, but will get a decent rate through the bank. It is possible things have changed, but I don't know.

 

I would suggest you think long and hard about purchasing a house. It's a lot of work. It's expensive. Furnaces break, water pipes leak, grass needs to be cut, leaves need to be raked, etc. This isn't even mentioning 'upgrading' things that is inevitable. Honestly, if I could have found something I liked by renting instead of owning, I probably would have. Coming from out of province, wanting to live in a house and having a dog were barriers to that. It does feel good to have our own spot though, I do take pride in it and love to fiddle with things around the house.



#9 NLengr

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Posted 09 March 2017 - 03:58 AM

We had RBC as a resident. 20% down (half from LOC, half from other sources). When we went to them when I was starting my staff job and needed to buy a house in our new town, they were morons and basically treated me and my spouse like we were homeless vagrants asking for a 25 million dollar loan to invest in a clown college. I ended up pulling all my business out of them as a result. They lost a ton of potential money long term because they were idiots.

We got a mortgage from national bank after. They were very good to deal with. Highly recommend.

#10 ArchEnemy

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Posted 19 March 2017 - 12:29 AM

I'm in a similar position myself - hoping to purchase a property before the start of residency on July 1st.

 

What are the mortgage rates that most of you guys are receiving? 


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#11 blacktowel

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Posted 19 March 2017 - 01:32 AM

So met with RBC mortgage specialist who deals with medical/dental folks. Said RBC allows for 10% downpayment taken from LOC, nothing higher. Also they will mortgage the rest. None of the above crap that was being told to me by the other mortgage specialist. Variable rate was prime-0.3%, so 2.4% in Alberta.

 

However, he was unsure if I am unable to sign a mortgage prior to actually starting residency. He notes that RBC would be fine with it, but unsure if CMHC (required insurance if downpayment is less than 20% of price of property) would allow it.



#12 ArchEnemy

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Posted 19 March 2017 - 03:05 PM

So met with RBC mortgage specialist who deals with medical/dental folks. Said RBC allows for 10% downpayment taken from LOC, nothing higher. Also they will mortgage the rest. None of the above crap that was being told to me by the other mortgage specialist. Variable rate was prime-0.3%, so 2.4% in Alberta.

 

However, he was unsure if I am unable to sign a mortgage prior to actually starting residency. He notes that RBC would be fine with it, but unsure if CMHC (required insurance if downpayment is less than 20% of price of property) would allow it.

How would they verify that you used your LOC for the downpayment? 


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#13 blacktowel

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Posted 19 March 2017 - 03:51 PM

How would they verify that you used your LOC for the downpayment? 

 

I'm assuming that since my LOC is through RBC, if my mortgage is as well, they have access to that information. Otherwise, good point!



#14 ArchEnemy

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Posted 19 March 2017 - 04:22 PM

I'm assuming that since my LOC is through RBC, if my mortgage is as well, they have access to that information. Otherwise, good point!

 

Have you considered withdrawing funds from your LOC, and transferring it to your chequing account with another bank? Yes you will incur interest, but at least you will not have to pay for the premium on the CMHC insurance. 


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#15 schmitty

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Posted 24 March 2017 - 01:32 PM

I also had this problem as I just matched to a different province and want to buy a place. They changed it from requiring 20% for residents to 35% down. However, I have a long history and current mortgage with RBC and they applied for an exception and got it and now have a pre-approval, so they are allowing me to put only 20% down. You could ask them to try this for you as well if you have great credit. 

 

As others suggested, you could transfer LOC money to a different bank if you have room (25% of the purchase), then use this plus another 10% from your LOC (as they allow) for the downpayment. Technically 'not allowed' but not illegal or anything. 


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#16 ArchEnemy

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Posted 24 March 2017 - 03:27 PM

I also had this problem as I just matched to a different province and want to buy a place. They changed it from requiring 20% for residents to 35% down. However, I have a long history and current mortgage with RBC and they applied for an exception and got it and now have a pre-approval, so they are allowing me to put only 20% down. You could ask them to try this for you as well if you have great credit. 

 

As others suggested, you could transfer LOC money to a different bank if you have room (25% of the purchase), then use this plus another 10% from your LOC (as they allow) for the downpayment. Technically 'not allowed' but not illegal or anything. 

 

I was able to get a mortgage with only 20% downpayment!


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#17 schmitty

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Posted 24 March 2017 - 08:30 PM

I was able to get a mortgage with only 20% downpayment!

Excellent! Seems liek this give exceptions to the new 35% rule if you have good credit, etc.

 

As for rates, they are offering me 2.69% 5-year fixed from RBC. You can get lower from non-big banks, but they usually won't deal with medical residents with large amount sof debt and unproven income. 


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#18 ArchEnemy

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Posted 25 March 2017 - 02:58 AM

Excellent! Seems liek this give exceptions to the new 35% rule if you have good credit, etc.

 

As for rates, they are offering me 2.69% 5-year fixed from RBC. You can get lower from non-big banks, but they usually won't deal with medical residents with large amount sof debt and unproven income. 

 

That is a really good rate for 5-year fixed. I'm deciding between: 

 

1) 2.74% for 5-year fixed

2) 2.20% for 2-year fixed

3) 2.3% 5 year variable (prime - 0.4%)

 

Currently leaving towards Option #3, given that I will also be able to use my LOC at Prime


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#19 schmitty

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Posted 25 March 2017 - 01:03 PM

That is a really good rate for 5-year fixed. I'm deciding between: 

 

1) 2.74% for 5-year fixed

2) 2.20% for 2-year fixed

3) 2.3% 5 year variable (prime - 0.4%)

 

Currently leaving towards Option #3, given that I will also be able to use my LOC at Prime

 

Yeah I'm torn as well as I was quoted a similar variable rate from RBC. I was actually quoted 2.05 (prime - 0.065) from National Bank variable 5 year, but with more restrictions and not sure they would allow me to only put 20% down. 

 

With our economy doing better and the US already increasing rates, the fixed rate is attractive, but at the same time, prime would have to go up quite a bit in the next 5 years to make the variable worse than fixed. I'm still leaning toward the 5-year fixed. Too bad we can't predict the future!

 

Another option for those trying to come up with a down payment with the LOC restrictions - if you have a family member that has access to the amount you need short-term, you could have them sign a "gift" letter, wherein they 'gift' you the amount. You give this to the bank and then they are satisfied that you are not borrowing the down payment. Then right after the mortgage closes, pay that family member back from your LOC. I did this for the first place I bought and it would out great. 


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