# Net Worth Verification for Rental Property



## mossman1 (Feb 22, 2017)

Hi, 

So I just found out I can't fully use my Defined Contribution plan for proof of net worth. I already submitted the source of my downpayment. But the bank (a Big 5) wanted net worth verification. 

Does anybody know what is generally allowed? My broker is also following up on that question. The new house is only under my name. 

My wife and I have a matrimonial home but it's only under her name. Mortgage on it is around 355K. Comparables recently have gone at or above $1 mil.

Update: Actually it was only the DCPP (Defined Contribution Pension Plan) portion that is locked in and not eligible. The RRSP portion is apparently eligible. The broker's assistant who I'm dealing was also a bit confused. She's checking how much is eligible. I also had extra on top of the downpayment required so needing to clarify how much of that is eligible.


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## Mortgage u/w (Feb 6, 2014)

Is your bank looking for a proof of your down-payment or simply questioning your assets? Obviously, DCPP cannot be used as down-payment - you'll need to provide proof of liquid savings only. RRSP can be used but only if you have enough to cover the taxed portion needed to cash them.

As for assets, well anything goes as long as you can prove it. I don't see why your bank is so interested in your net worth to the point its making everyone question what they will consider.


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## mossman1 (Feb 22, 2017)

Mortgage u/w said:


> Is your bank looking for a proof of your down-payment or simply questioning your assets? Obviously, DCPP cannot be used as down-payment - you'll need to provide proof of liquid savings only. RRSP can be used but only if you have enough to cover the taxed portion needed to cash them.
> 
> As for assets, well anything goes as long as you can prove it. I don't see why your bank is so interested in your net worth to the point its making everyone question what they will consider.


Yea, not sure either. I went through a broker. The broker I was dealing with was more 'junior' and she didn't know that DCPP was not eligible. This is for a second property. Ideally a 'downsize' home much later on, but to be rented out in the mean time. I applied honestly as a non-owner occupied home, so had to go through the process that differed if it was going to be my primary home. 

Everything worked out, as the balance above my downpayment, plus RRSP part was sufficient. Plus, I have a 2009 Rav4 v6 which is still worth decent, and my matrimonial home, both which I didn't specifically include when I put in the paper work initially as I thought my 'retirement' assets would have been sufficient. 

So I learned alot of new little things going for a non-owner occupied mortgage. I guess they want some kind of extra collateral/cushion for a non-owner occupied property.


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## digitalatlas (Jun 6, 2015)

Another thing you probably have or will learn about is the appraisal, which I'd never dealt either because both of my primary residences over the years have been new builds and not resales. The appraiser assessed the worth of the rental to be below the market value, so the mortgage offered was lower than the purchase price. I don't know if this is as common for a primary residence or if there is a preference to appraise a rental lower to limit risk for the mortgager...thr bank paid for the appraisal after all. 

Luckily I was able to provide more cash to cover it myself, but this was a learning point for me and a piss off. Also disappointed with myself because I otherwise did a lot of homework on the subject before purchasing, but you learn by doing too I guess.


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## Just a Guy (Mar 27, 2012)

It depends on the appraiser you get. While most appraisers seem to be conservative on their appraisals, some are a lot worse than others. I've had many who were fair, a few that came back higher than expected, and a few who came back ridiculously low (one so low that the bank actually ordered a second appraisal on the same property without my requesting it)...I suppose it all balances out in the end.


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## mossman1 (Feb 22, 2017)

digitalatlas said:


> Another thing you probably have or will learn about is the appraisal, which I'd never dealt either because both of my primary residences over the years have been new builds and not resales. The appraiser assessed the worth of the rental to be below the market value, so the mortgage offered was lower than the purchase price. I don't know if this is as common for a primary residence or if there is a preference to appraise a rental lower to limit risk for the mortgager...thr bank paid for the appraisal after all.
> 
> Luckily I was able to provide more cash to cover it myself, but this was a learning point for me and a piss off. Also disappointed with myself because I otherwise did a lot of homework on the subject before purchasing, but you learn by doing too I guess.


Mine actually came back about 10% higher than what I paid. Now this was because I bought in Feb in Durham and it was done in early April, so the area did go up, but probably now has pulled back down around February levels (maybe slightly higher). I had to pay for it. 

So all the documents were signed, and I pick up the keys today. Also, insurance coverage is different. It's higher, when it's classified as non-occupied (which again, I told the truth. I can easily see how people can fib to make the whole process easier and cheaper). I'll have someone in shortly once I clean up the place, and look for a AAA tenant for a minimum 1 year lease. It'll go down once I confirm someone is going to be living there. They also require a Guaranteed Replacement Cost clause or the amount of the mortgage. 

The first insurance company I used didn't offer that for non-owner occupied homes. That was a bit of a last minute worry. But plenty of insurers that do offer that. There aren't huge differences, but just enough, that if you don't have good financial cushion, and ample time as a first timer, it can get a bit stressful (if again, telling the truth for everything).


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