Tips, Advice, and Explanations from a Vancouver Mortgage Broker  

Can I Roll My Other Debts Into My Mortgage?

Transcript of Video Blog:

Hi everybody, it’s Rowan Smith with the Mortgage Centre. We’re going to do something a bit little different here this week. It’s where I’m going to answer one of the most common questions I receive, which is “Can I roll my other expenses into my mortgage?” So let’s look at exactly how that would go down.

In this example, we’ll take a look at down payment, how it’s structured in an individual mortgage deal. For the purposes of illustration, let’s assume $100,000 purchase price — just to keep our numbers nice and round.

Now, in Canada, the maximum amount of financing that you’re allowed to get on a property is 95 percent. So in order for you to roll any additional costs into that, you would have to roll more than 95 percent.

So if someone says to me, “Can I roll my car payment into my mortgage?” They’re faced with the same set of constraints — $100,000 purchase price, 95 percent or $95,000 financing. But they ask me, “Can I roll the $10,000 a month loan into my mortgage?”

We end up with a situation where the client is rolling more than 100 percent of the value of the home. This is not allowed. So are there ever situations where you can roll costs into your mortgage? The answer is “Yes, you simply have to have a more substantial down payment.”

Consider this example — a client purchasing a $100,000 home, has $50,000 down payment, 50 percent down. That same person asks, “Can I roll my $10,000 car loan into my mortgage?” The answer in this case is “Yes.” They are well below the maximum Canadian level for financing.

But there’s a second twist to this. Are they below the 80 percent rule? Now the 80 percent rule, anything over 80 percent financing — so borrowing more than 80 percent triggers CMHC fees on a sliding scale. If you were to borrow as high as 95 percent, those fees could be upwards of $3,000. So it may not make sense in those circumstances to do so.

If somebody is looking at buying this piece of property and rolling their closing costs in, in addition to it, they can do so up to 80 percent. Now they can go beyond 80 percent, but then they start incurring CMHC fees. But again, the maximum of 95 percent applies. You can’t roll more than 95 percent into the financing.

As usual, if you have any questions, feel free to call me anytime. I’d be happy to look at your specific situation, see if there’s a way we can perhaps optimize the other debt that you have — whether it be through a consolidation loan or through consolidating it into your mortgage.

The important thing is not to look at it as “Am I rolling it into my mortgage?” But rather, “Am I able to put less down and keep money back to pay these other expenses?” For the Mortgage Centre, I’m Rowan Smith.


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