Sometimes, your liquid assets are certainly enough for a home purchase. But that doesn’t always mean you’re a high earner. Some people choose to work part time, or take on convenient jobs, since their financial situation is stable by other means. In most circumstances, this type of living situation can make it hard to get a mortgage. But, thankfully, there is a way for these individuals to use their credibility in assets to qualify for a mortgage. This can be done with high net worth mortgages in Vancouver.
If you are a high net worth individual looking to mortgage a home with moderate income, we can help. We encourage you to be in touch; we can explain the process to you in more detail and answer questions you may have. Our lead mortgage broker in Richmond has had success using this program, and can help direct your next steps.
Your location doesn’t matter a whole lot; we can help clients with mortgage-finding services throughout B.C. and Western Canada!
Contact us today!
Below, we answer some questions you may have about high net worth mortgages in Vancouver.
How much cash do I need to qualify for a high net worth mortgage in Vancouver?
If you are looking to use your net worth to qualify for a mortgage loan in Vancouver, you will need at least $250K in liquid assets.
You will need to have owned these assets for at least 12 months prior to applying for a mortgage. The bank will ask for proof of this.
However, there are a few more details to know about this ‘rule.’Read more
The $250K can not be used to purchase any home. There will be limits to the loan amount you can get.
For every dollar you want to borrow, a bank will require an equal dollar in liquid assets above the standard qualifying amount (i.e. using conventional debt service ratios).
For example, let’s say you want to purchase a home worth $950K. Under so-called, ‘normal’ circumstances, perhaps you qualify for a $400,000 mortgage. This means you will need $550K in liquid assets, as a bare minimum, to qualify for this type of loan.
Also keep in mind that any liquid assets you use for this type of mortgage qualification will not include the down payment.
So, if we use the example numbers above, this means you would require a down payment in addition to the $550K in liquid assets.
Regarding the down payment, keep in mind it can not be gifted. It can neither be insured. This means you will need at least 20% of the purchase price of your home as a down payment, using your own funds.
However, the rules for the minimum down payment can change, given the circumstances involved. It’s best to speak with a mortgage broker who can look at your case in more detail. They can let you know what budget you’d require to purchase a home with your finances in view.
Finally, all the account holders where the finances are held will need to be on the mortgage. This means that if you were recently divorced but your ex is still named on your bank account, you will both need to be on the mortgage paperwork, too. Or, if you use an account shared with family members, these people will all need to be ‘co owners’ of your new home.
Contact us, and we’ll explain the rest!
Can I use foreign assets or income to qualify for a high net worth mortgage?
Unfortunately, no. The assets must be in Canada, as well as all income pertaining to the mortgage application.
It’s also important to note that this program is only eligible to Canadian residents who are filing taxes in Canada.
If you would like to purchase a home using foreign income, see this page of our website.
If you are a new immigrant, you may qualify for a ‘new to Canada’ mortgage. Learn more here.
Or, contact us directly, and we’d be happy to find a program that best suits your needs:
Will I be subject to a credit check with a high net worth mortgage?
Yes, the bank will still check your credit score to ensure you are ‘good for the money’ (i.e you will pay back the loan on time). They will also want to verify your income with pay stubs, your Notice of Assessment, etc. You can learn more about the documentation you need for a mortgage application, here.
Given that your income may be low in comparison to your assets, the bank will also require a strong credit score, not just an acceptable one.
Note that if you are in debt, your debt owing will be deducted from your available assets, when considering your net worth.
If my assets are in investment accounts, can they be used towards my mortgage application?
You can use investment accounts towards a high net worth mortgage in Vancouver. However, the assets can not be ‘locked in.’ You will need to be able to access the cash if you need it.
If you are looking to use RRSPs for this type of mortgage, the amount available will be reduced by 30% to account for taxes you’d need to pay if you were to withdraw those funds.
Otherwise, your assets can be in most types of investment, savings or chequing accounts in Canada. This includes stocks (of a publicly traded Canadian company), ESOPs, mutual funds, GICs, TFSAs, and so on.
There are some invalid types of assets, such as cryptocurrency, which can not be used towards a high net worth mortgage. A mortgage broker can help you identify other invalid assets, if they pertain to you.
My assets are in another property – can an exception be made for a high net worth mortgage?
Sometimes, this is possible. However, generally, if you have assets ‘locked in’ to a property, a bank will not use this as collateral for a high net worth mortgage. In these circumstances, a mortgage broker may be able to help you find a different mortgage program or lender to better fit your case.
However, if you can show a purchase and sale agreement for the property you want to use for this mortgage type, the bank may accept it. This means your property assets must be in the process of being sold.
Can I use my assets to mortgage any type of property?
There are some limits around the type of property you can mortgage with a high net worth mortgage. Though they are rather flexible at the same time.
High net worth mortgages can be used towards:
- Your primary residence.
- A secondary or vacation home.
- Up to five rental properties (including properties already mortgaged elsewhere).
They can not be used towards:
- Purchase Plus Improvements mortgages
- Mobile homes
- Home on Reserves
- Defaults on other mortgages
- Secondary financing
Plus some other exclusions, which a mortgage broker can explain to you.
Your income doesn’t have to be a setback when financing a new home; contact us to see if you qualify for a high net worth mortgage!
Your low to moderate income doesn’t have to mean you can’t purchase a new home using your assets. If, after reading the above, you feel you may fall into the boat of being a ‘high net worth borrower,’ we’d love to help. There will be a few steps to go through, but we can guide you through all of them.
Contact us today, and we’ll schedule a call to learn more about your case. From there, we can make recommendations on a mortgage loan you may qualify for.