GDS and TDS Rules in MIC Deals
When you work with an alternative lender or MIC, will they require GDS and TDS ratios?
The answer is both yes and no.
Most MICs don’t have hard and fast rules about GDS and TDS.
However, this doesn’t mean we don’t thoroughly examine the borrower’s ability to pay. The main difference between alternative lenders and the banks in this regard, is that while their rules are quite black and white, MICs’ are more nuanced.
As an MIC/alternative lender, we take a more subjective approach to our analysis of the borrower’s ability to pay. We examine areas and factors that can contribute to the borrower’s overall financial situation, such as:
- Consistent income from non-traditional sources (family members, trusts, overseas, etc.)
- Income that doesn’t get T4-ed such as foreign student housing
- The type of industry that the borrowers work in as well as the nature of the industry (seasonal, contractual, etc.)
- The likelihood that the borrower’s income will continue as it has.
- Whether the income stated is reasonable based on the job that they do
- Whether their real income is sufficient to provide a decent quality of life and still leave enough to make the mortgage payments.
As a broker dealing with an MIC file, it’s most effective to replace GDS and TDS comments with a different narrative. Reframe the conversation and explain that MIC’s and alternative lenders are looking to take a snapshot of the borrower’s situation as a whole. They want to know how they’ll be able to make all their payments without having to win the lottery.
And as always, the expert underwriters at Kokanee Mortgage are here and ready to help. Regardless of the situation, we have systems in place to get your borrower through the lending process with as much ease as possible. Give Kokanee Mortgage a call today and see the difference that we can make.
