Can I Buy My Canadian Dream House?

Q. I am in Quebec Canada so I hope you can just offer any advice that would be greatly appreciated.

I recently put in an offer on a house and my girlfriend and I have saved up money and we have not only our 5% down but we have our money for any and all of the costs to close the deal. Now here in Canada you need 20% or 25% to mortgage a house and because most people don’t have $30,000 or more there is an organization called cmhc/schl (Canadian Mortgage and Housing Corporation) which provides the rest of the money and then the bank can issue you the mortgage.

Now here is my predicament. I am on CSST (workers compensation) I had a bad accident at work and now have 2 herniated disks in my back. It has been almost a year I am on CSST and my specialist says it will take quite a bit of time to heal because first; when it comes to the spine nothing is simple and two; there is no operation for what I have.

Now the mortgage specialist I’m dealing with knew this in the beginning, I provided all my workers compensation paper and all the necessary papers. I ended up being denied because of the CSST so I was lucky enough to have another option offered by the bank. They asked for a co-signer AND a co-buyer which I was able to find in a family member. So now I have myself, my girlfriend and my co-signer/co-buyer and all the necessary money in the bank and so on, and guess what, we got denied again!?!

Now don't get me wrong, I am an extremely reasonable man but what I don’t get is with all that I have done in order to make them happy it was still not good enough, I understand they calculate risk and such but even though I still get 90% of my salary, I still make really good money. On top of that, CSST is always on time and can never go bankrupt and I know it's not an ideal source of income but I have no choice now. If I could I would work, but I have excruciating pain from the moment I wake up till I go to sleep. I cannot return to work anytime soon and I do not want to use the word discriminating but it sort of feels that way. The bank would not even put the amount of money I get on the paper work, they marked that I make a $1 a year! Heck people on social assistance get more money than that! I know you maybe thinking “well why not wait till you get better” but I cannot, first and foremost the law is changing in April and it will require people to have 10% for their down payment and second, I have no idea when I will be able to go back to work and I cannot stay in this bachelor apartment with my girlfriend for much longer.

Anyways I’m sorry for writing such a long letter but I needed to “talk” to someone, the stress is killing my back and I feel myself down spiraling into a depression keeping this all in and trying to put on a smile for my girlfriend. I just feel helpless right now and I would just like to have some advice and I really do appreciate the time you took to read this. Have yourself a good day and seriously I wish you happiness and health to you and your loved ones.

A. You’ve got a lot going on, and it’s not surprising that you’re feeling depressed and stressed out over everything. I’ll see if I can help.

As you point out, laws in Canada are often much different than they are in the United States, so you should take anything I say with a HUGE grain of salt. But it appears that you’ve been battling the discretion of a lender to decide to whom it wishes to lend money. Lenders are generally not required to give mortgages to just anyone (actually, part of the current world-wide financial crisis is a direct result of mortgage lenders disregarding common-sense lending practices, like ensuring that borrowers have the means to repay loans. But I digress.)

If your bank doesn’t believe that your workers’ compensation benefits are an adequate source of income (regardless of how regularly the payments are received), there is, most likely, nothing you can do about it. While I know that it would be wonderful to actually purchase a home, lenders like to see people who are gainfully employed, and likely to be so for the long-term. You being on disability – even though it’s not your fault – is not a positive factor when evaluating your loan application.

There are two things that occur to me. You could have your co-signer be the main person responsible for the loan (assuming that co-signer wants to take that responsibility) and you co-sign for that person, so that you are both on the mortgage, and on the title. Alternatively, you co-signor could purchase the house and then you can enter into a lease-purchase agreement with the co-signor (assuming that’s not contrary to Canadian law or your lender’s restrictions.) You might want to check with an attorney on this latter possibility.

I don’t believe that it’s impossible for you to get into that dream house of yours, but it will probably take some creative thinking on your part.

Good luck.