# Financial Mortgage Advise



## melnor (Sep 26, 2011)

Could someone please help me with some advise? My brother and his "then" commonlaw purchased a house for just under $400,000 seventeen months ago. He did not have a down payment but to my amazement the bank gave him a $30,000 LOC to use as a down payment. He put $20,000 from the LOC down and borrowed the mortgage amount of $378,000 plus CHMC insurance of $12,500. Two months ago they split up so now he is trying to pay everything on his own. Bottom line, he is over mortgaged and beginning to slide financially and knows he has to sell the house.

My question is this...what is the best way for him to do this? He thought about just selling it, (now the value is $435,000) and paying off all his debt and repurchasing something cheaper later. I am wondering if it would make better financial sence for him to sell and pay off debt with the equity then roll his mortgage over to a cheaper home, providing he will have 5% of the possible cheaper house left over to meet the minimum down payment requirement after it is all said and done. If he sells now of course he will have all the penalties to deal with for not completing the term. Also, what happens to the $12,500 for insuring the first mortgage. Does he just lose all that? If he does roll his mortgage over to a cheaper house will CHMC just go over to that house?

If anyone has any suggestions it would be greatly appreciated, I don't know enough about this stuff to be of much help to him!

Thank you so much,
melnor


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## Shayne (Apr 3, 2009)

Do they both own it?

If he plans to buy right away he should try and port the mortgage to a less expensive property. This will mean he will not lose the CMHC he has paid.


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## Berubeland (Sep 6, 2009)

Your brother is in big trouble because all the fees will add up to more than his equity and that's if he gets $435,000

There will be mortgage breaking fees, real estate fees of about $20,000 plus hst, lawyer fees and so on. 

Has he considered renting out rooms to help cover the costs? or how he can come up with the shortfall? 

Will his ex pony up her half of the costs? I assume she is also on the mortgage.If she is then she is also liable.


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## marina628 (Dec 14, 2010)

Yes the fees are going to be huge on this house ,I know of people who had to live together for 2 years after they split up just for this reason.Also make sure she is on the hook for her 50% , my brother was stupid and took the financial hit when he was divorcing because he could not see what a morally bankrupt person he was married to.


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## melnor (Sep 26, 2011)

*sadly...*

Sadly her name was not on the mortgage. He has a realtor who will sell for $6900 so that well help a bit... yeah I am pretty sure this is going to be a rough one!

Shayne what you were talking about...porting the mortgage might be his best option, what steps should he take to get this started? How long between selling and repurchasing does he have?

Thank you so much everyone!
Hope you all have a great day!


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## Shayne (Apr 3, 2009)

melnor said:


> Sadly her name was not on the mortgage. He has a realtor who will sell for $6900 so that well help a bit... yeah I am pretty sure this is going to be a rough one!
> 
> Shayne what you were talking about...porting the mortgage might be his best option, what steps should he take to get this started? How long between selling and repurchasing does he have?
> 
> ...


Talk to the lender. 30 days is pretty standard.


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## kubatron (Jan 17, 2011)

I've found 60-90 days is standard for porting but you gotta talk to the lender.


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## OhGreatGuru (May 24, 2009)

melnor said:


> ... He did not have a down payment but to my amazement the bank gave him a $30,000 LOC to use as a down payment. He put $20,000 from the LOC down and borrowed the mortgage amount of $378,000 plus CHMC insurance of $12,500. ...


And people wonder why the government tightened the downpayment rules on mortgages. Maybe this was during the short period when zero down payment mortgages were allowed. Otherwise the bank's mortgage dept. colluded with it's loans dept. to skirt the CMHC rules for insured mortgages.


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