Getting a mortgage as a Pilot

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DanWEC
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Re: Getting a mortgage as a Pilot

Post by DanWEC » Wed May 29, 2019 8:28 pm

To share an experience I had- bought a house to flip a while ago. Worked out amazingly to skip some rungs on the ladder.

Didn't get approved at first- Mortgage broker said the lenders didn't like my monthly debt load because of a closed student line of credit from flight school.
Since it "was" an open line of credit initially they kept assessing my monthly payments as what it would be if it were repayed in 3 years, (Their calculation for open loans) even though it had converted to a structured payment spread over a longer period.

Broker wasn't working with me. Tried another, and no dice. I now think most independant ones aren't very effective at all.

I went directly to the bank holding my SLOC, and asked the manager for a written letter attesting to my actual payments. I took that to my home bank, explained it, they actually paid attention, and I had a full mortgage with a surprsingly great rate 30 min later.

Moral is it pays to shop around and negotiate a bit.

Cheers
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Meatservo
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Re: Getting a mortgage as a Pilot

Post by Meatservo » Thu May 30, 2019 3:22 am

I'd like to thank Adam Oke for the time and thought he put into his post on the last page. There is lots of good advice there. It would take some self-discipline, but if you followed that advice you would not regret it.
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ehv8oar
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Re: Getting a mortgage as a Pilot

Post by ehv8oar » Thu May 30, 2019 7:37 am

Thanks everyone for your input and thanks Adam for taking the time to write all that down.

It seems I've got to agree and just accept the decision by the bank not to give me a mortgage for a big enough amount at the moment. It's frustrating because FYI the rates for getting a mortgage right now (if anyone else is considering it) are very good and because my intention was to get room mates etc so it would be much easier to pay the mortgage than my rent.

It's the old problem of being caught in the poverty trap of paying rent so you cant save to put up more money for the deposit (I can afford 10% now). I guess the only way forward is to wait until I can upgrade and get a salary increase.

Once again thanks everyone for your time.
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goingnowherefast
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Re: Getting a mortgage as a Pilot

Post by goingnowherefast » Thu May 30, 2019 7:54 am

I had absolutely no problem getting a mortgage as a pilot. Although my financial situation and planning is very similar to Adam Oke's.

I also don't count per diems as income.
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schnitzel2k3
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Re: Getting a mortgage as a Pilot

Post by schnitzel2k3 » Thu May 30, 2019 9:59 am

https://youtu.be/Uv_nooBQNUk

Roger Victor does a good job explaining.

S.
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ehv8oar
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Re: Getting a mortgage as a Pilot

Post by ehv8oar » Thu May 30, 2019 11:08 am

Ha yeah that's pretty good. His video on the Pilot shortage is good too.
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digits_
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Re: Getting a mortgage as a Pilot

Post by digits_ » Thu May 30, 2019 11:31 am

ehv8oar wrote:
Thu May 30, 2019 7:37 am
Thanks everyone for your input and thanks Adam for taking the time to write all that down.

It seems I've got to agree and just accept the decision by the bank not to give me a mortgage for a big enough amount at the moment. It's frustrating because FYI the rates for getting a mortgage right now (if anyone else is considering it) are very good and because my intention was to get room mates etc so it would be much easier to pay the mortgage than my rent.

It's the old problem of being caught in the poverty trap of paying rent so you cant save to put up more money for the deposit (I can afford 10% now). I guess the only way forward is to wait until I can upgrade and get a salary increase.

Once again thanks everyone for your time.
Have you looked into renting to own? Some owners might be open to it.

What about buying something super tiny? Like a trailer style thingy?
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Re: Getting a mortgage as a Pilot

Post by jakeandelwood » Thu May 30, 2019 1:18 pm

rookiepilot wrote:
Wed May 29, 2019 6:27 pm
jakeandelwood wrote:
Wed May 29, 2019 6:07 pm
The banks don't think beyond their little world. When I applied for a mortgage they said they could give me X amount of $, I said if you give me a bit more I can afford something close to work to avoid commuting therefore saving about $500 a month which in turn could go towards the mortgage. They said they only care about my net income and the amount of my mortgage payment, that's it. Banks and insurance companies are frustrating
This is a bizarre comment.

Of course they don't care. They are in business to make money and manage their risk. They've seen a thousand deadbeat stories. What do you expect?
B izzare? People expect a bit of common sense from a bank. There are deadbeats that make lots of money and blow most of it and leave their bills unpaid, I know one, owes money all over town, then there are people who make peanuts but they always make sure their IMPORTANT bills are paid, such as a roof over your head. I was simply saying if I save some money over here I can spend it over there even though I still make the same salary, my point is that perdiem money is money made at the original posters job, what difference does it make if it's just part of his salary or a separate perdiem? The banks nitpick over stupid little details when in the end anyone can loose their job the day after they get their mortgage anyway.
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Re: Getting a mortgage as a Pilot

Post by ant_321 » Thu May 30, 2019 2:26 pm

jakeandelwood wrote:
Thu May 30, 2019 1:18 pm
rookiepilot wrote:
Wed May 29, 2019 6:27 pm
jakeandelwood wrote:
Wed May 29, 2019 6:07 pm
The banks don't think beyond their little world. When I applied for a mortgage they said they could give me X amount of $, I said if you give me a bit more I can afford something close to work to avoid commuting therefore saving about $500 a month which in turn could go towards the mortgage. They said they only care about my net income and the amount of my mortgage payment, that's it. Banks and insurance companies are frustrating
This is a bizarre comment.

Of course they don't care. They are in business to make money and manage their risk. They've seen a thousand deadbeat stories. What do you expect?
B izzare? People expect a bit of common sense from a bank. There are deadbeats that make lots of money and blow most of it and leave their bills unpaid, I know one, owes money all over town, then there are people who make peanuts but they always make sure their IMPORTANT bills are paid, such as a roof over your head. I was simply saying if I save some money over here I can spend it over there even though I still make the same salary, my point is that perdiem money is money made at the original posters job, what difference does it make if it's just part of his salary or a separate perdiem? The banks nitpick over stupid little details when in the end anyone can loose their job the day after they get their mortgage anyway.
Per firm is for buying food. How does the bank know you don’t spend it all on food?
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rookiepilot
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Re: Getting a mortgage as a Pilot

Post by rookiepilot » Thu May 30, 2019 2:51 pm

All I'm saying is it's pure risk management.
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ehv8oar
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Re: Getting a mortgage as a Pilot

Post by ehv8oar » Fri May 31, 2019 7:47 am

Have you looked into renting to own? Some owners might be open to it.

What about buying something super tiny? Like a trailer style thingy?
Hey digits,

I have indeed, it's a possibility but it's difficult to find a rent to own, most sellers just want to get the money and move on.

Ha that's pretty much what the mortgage broker said to me, that there's some nice mobile homes out there. Some of them do look pretty good and if it was by itself I would consider it but I dont fancy living in a trailer park.
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Re: Getting a mortgage as a Pilot

Post by co-joe » Fri May 31, 2019 10:10 am

Adam Oake corrected me that it's 25 k from your rsp on the first time home buyer, good catch.

Just for the sake of discussion, if you haven't explored this option look at rsp loans. Basically you can borrow to put into your own rsp's but you have to be able to pay the loan back within one year. You can make lump sum payments as well so here's a rough calculation of how it plays out.

The bank loans you 10k to put in an rsp at their institution. They have your money so if you default they are only out the interest. As a result it's a very low interest loan. You pay $833 a month plus a tiny bit of interest but get the tax deferral immediately so in theory you should get somewhere around $2500 back on your taxes which you can then apply to the principle. Now you only owe $7500 on a $10 k loan. It still costs that $833 per month plus interest which now only takes you 9 months to pay off.

If you can build the 25 k each with a partner or spouse, having 50k to put down as a down payment makes you look good, plus borrowing and paying off loans increases your credit score. If you really really really really trust your partner or spouse, one of you can buy rsp's in their name. You get the tax deferral, they get the money in their rsp account. It's risky though, cause if they decide to cash the rsp you have to pay back the tax on it so trust is a really big issue here. Great if one of you makes more money.

Banks also like giving mortgages to married or common law couples because there's two parties they can go after if you default.
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Re: Getting a mortgage as a Pilot

Post by digits_ » Fri May 31, 2019 10:36 am

How would that help? If I read it correctly, the downpayment is not an issue, it is the income to pay off the mortgage that worries the banks.
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Re: Getting a mortgage as a Pilot

Post by bearitus » Fri May 31, 2019 10:42 am

I am also a poor pilot trying to buy a house in the YYZ area. Its too bad they don't accept multi PIC when qualifying for a mortgage...
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Re: Getting a mortgage as a Pilot

Post by goingnowherefast » Fri May 31, 2019 11:00 am

Do they accept my PPC on a transport category aircraft?
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Re: Getting a mortgage as a Pilot

Post by co-joe » Fri May 31, 2019 1:06 pm

digits_ wrote:
Fri May 31, 2019 10:36 am
How would that help? If I read it correctly, the downpayment is not an issue, it is the income to pay off the mortgage that worries the banks.
Well the OP didn't mention what part of the equation was the issue. He just says he can't get a mortgage on the shit money he makes. Maybe more of a down payment would help?

There's also a thing in the 2019 federal budged called the CMHC First Time Home Buyer's Incentive. This article suggests it's supposed to be in place by September this year.

https://globalnews.ca/news/5069183/budg ... rdability/

There's also this which relates to my suggestion and may help...if it happens.
As was widely anticipated, the government would also enhance the Home Buyer’s Plan (HBP), which currently allows first-time buyers to take out up to $25,000 from their registered retirement savings plan (RRSP) to finance the purchase of a home, without having to pay tax on the withdrawal. The budget proposes raising that cap to $35,000.
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complexintentions
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Re: Getting a mortgage as a Pilot

Post by complexintentions » Fri May 31, 2019 2:47 pm

ShawnR wrote:
Wed May 29, 2019 7:58 pm
Lots of great advice here! Most of it is standard knowledge, but then I am over 50 so have had time to hear it before.... Nice to see it so well presented and all in one spot. The career path of a pilot adds its own nuances ie moving, bonds, seasonal jobs, .....

A young fella at work once told me he had recently renegotiated his mortgage and was quite proud to state that he was making monthly payments so that he could put away some extra money each month. I almost fell off of my chair. I asked him about what he was doing to reduce his principal and he asked me what that was..... He had just gone through a meeting with his bank.... I printed off some examples of payment options, ie weekly, biweekly, accelerated bi weekly and how the various payment plans affected his principal, all for the same amount going out the door each month...told him the principal was his enemy and he had to get rid of it as soon as possible. He went back to renegotiate, I think. I was pissed at the bank for allowing him to get into that but then when someone figures they have it all figured out, well...... Do your own research and, as you have done here, ask questions. But because you might not like the answers, ie, you want too much too soon, does not mean it is bad advice.

The point about committing to a house when your career choice means there is a good chance you will be moving in the next few years is an insightful one. The loss/gain will be determined by your term there and the housing market. Is the market increasing? decreasing or plateaued? If it is gaining and you are paying similar payments to rent, then it will be good. Couple of bad luck scenarios, ie furnace, and it could be a negative. And a move on top....

Negatives can be absorbed in the long term, but not so easily in the short term. If you are really handy and can add value through renovations, then buy a well located fixer upper....and make it nice.

Just my 2 cents

Good luck!
Agreed that mortgage payments should be done on biweekly not monthly. But paying down principal faster on a mortgage at 2.99% when a balanced diversified portfolio conservatively returns 6% over time may be psychologically rewarding, but not good financial advice. (High-rate consumer debt like credit cards or LOC debt is a different story).

The opportunity cost of money tied up in Canadian real estate is a Greek tragedy of misallocated capital. Poorly-built overpriced crap that people slave their whole lives for. Makes me sad.
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jakeandelwood
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Re: Getting a mortgage as a Pilot

Post by jakeandelwood » Fri May 31, 2019 11:18 pm

Another option to consider if you have the ambition and drive is to build your own house, I did it, it took me 5 years while I worked full time and lived in a travel trailer in the driveway. Im not talking about paying a contractor to do it for you, or being your own contractor, I'm talking about doing it all yourself. That was the best financial decision I ever made. I bought a lot with a teardown house on it for 190k, spent 10k on the demo and 60k on building materials (houses are actually fairly cheap when you don't have to pay someone to put it all together!) So now I have a mortgage on 190k and a house that's been assessed at 450k, way better than a mortgage on 450k. Since I just bought materials as I went over 5 years I just paid out of pocket and it wasn't so bad. The building inspector told me I easily saved 20k doing my own plumbing and electrical. This option was the only way I could get a nice house with my salary at the time, everyone said I was crazy and it was a hell of a lot of work but I'm sure glad I did it in the end.
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Re: Getting a mortgage as a Pilot

Post by ehv8oar » Sat Jun 01, 2019 5:08 am

Good on ya for building your own house, that's certainly the best value for money your going to get!

I considered doing that but I know after 10 years of construction I'd end up with something like this

https://www.google.ca/search?q=shack&pr ... g_bjbxkRM
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Re: Getting a mortgage as a Pilot

Post by Brize » Sat Jun 01, 2019 10:43 pm

ehv8oar wrote:
Wed May 29, 2019 6:55 am
Yeah that's the problem I'm coming up against.

The annoying thing is that I certainly can afford the repayments, I'm paying more now in rent, it's just that to qualify they use a much higher rate than you actually get once you have the mortgage.

Thanks for the info though.
If you think simply comparing rent to a monthly mortgage withdrawal is enough, you've got a lot of life experience to gain. You can almost double a typical monthly mortgage payment (if detached home) and that is the average cost to owning a property.

Up front; CMHC insurance, closing legal costs and land transfer tax. Then monthly property tax, home insurance, mortgage insurance, water/sewer delivery, heating, a/c. Eventually repairs/maintenance, then roof and windows, furnace, water tank replacement.

There's good reason why they use the higher rate for "qualification".
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Re: Getting a mortgage as a Pilot

Post by digits_ » Sun Jun 02, 2019 12:50 am

ehv8oar wrote:
Sat Jun 01, 2019 5:08 am
Good on ya for building your own house, that's certainly the best value for money your going to get!

I considered doing that but I know after 10 years of construction I'd end up with something like this

https://www.google.ca/search?q=shack&pr ... g_bjbxkRM
Which would still go for a million in Toronto :mrgreen:
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goingnowherefast
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Re: Getting a mortgage as a Pilot

Post by goingnowherefast » Sun Jun 02, 2019 5:00 am

FWIW, I'm spending on average $700 a month on all the ancillary costs of owning my house. That's taxes, water, gas, electricity, insurance, plus a healthy extra set aside for repair bills. For example, the roof alone is, at minimum, $15,000 to replace every 15 years. Might as well set aside another $100/month just for that.

Add the mortgage on top of that.
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Re: Getting a mortgage as a Pilot

Post by whipline » Sun Jun 02, 2019 8:29 am

I have no clue what your finances are like. But you might want to try secondary lenders, I’ll get to that in a second.

I remember sitting with my banker years ago and saying it’s BS I can’t use per diem towards mortgages or loans. He said the bank will look at it if it’s been more then two years. They will average the amount. Mind you my per diem at the time was over 50,000.

Secondary lenders have less stringent requirements for giving out money. Generally more creative. And believe it or not the best interest rates your going to get is a new buyer with little money down, the mortgage is insured. If your planing on renting rooms you can use that as income as well. I know the CRA will!

Go speak to an experienced mortgage broker.
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Re: Getting a mortgage as a Pilot

Post by jakeandelwood » Sun Jun 02, 2019 10:39 am

When I went to my bank for a mortgage they did a pretty good job of making me feel like a loser because they said I didn't make enough to qualify for the amount I needed which was only 200k. I then went to a broker and they offered me 50k more than the bank would right away, and that was enough of a difference to make my plan work. Now 8 years later my bank keeps asking me to switch my mortgage to them. Yeah right, FU bank
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Re: Getting a mortgage as a Pilot

Post by schnitzel2k3 » Mon Jun 03, 2019 4:07 am

jakeandelwood wrote:
Sun Jun 02, 2019 10:39 am
When I went to my bank for a mortgage they did a pretty good job of making me feel like a loser because they said I didn't make enough to qualify for the amount I needed which was only 200k. I then went to a broker and they offered me 50k more than the bank would right away, and that was enough of a difference to make my plan work. Now 8 years later my bank keeps asking me to switch my mortgage to them. Yeah right, FU bank
You were smart to seek out a broker, as you likely got a discount on your rate which helped clear you for that extra 50k.

The banks are about the WORST place to get any financial advice, period, despite what those CIBC Penguins tell ya. There's a reason they are some of the best stocks to hold, and it's not because they are helping out their clients. Use them for the basics, don't pay any additionals if you can avoid it, and keep everything else diversified between investments and debt amongst other financial institutions. Don't worry jake, you might be quoted, but I know you already know this hehe.

There, some anonymous forum financial advice. Tell'em S sent ya.
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