The Taxi Operator's Income

The mortgage payment on $11.2 million at 9.5% over 25 years is about $97,900 a month. Add the estimated property tax and hazard insurance of $18,000, and the housing cost used for GDS is about $115,900. Andre's declared gross monthly income is $280,000, so the GDS ratio is about 41.4% ($115,900 divided by $280,000). That already exceeds the bank's 40% maximum before any other debt is counted.

For TDS, add the car loan of $38,000 and the credit card minimum of $12,000. Total monthly debt service is about $165,900, which is about 59.3% of $280,000. That is well above the 45% maximum. On the bank's stated policy, Andre does not qualify for the $11.2 million loan at the stressed rate.

If the income were falsely stated as $380,000, the GDS would fall to about 30.5% and the TDS to about 43.7%, which would appear to qualify. That arithmetic is exactly why the false letter is dangerous: it is designed to defeat the bank's credit assessment. The correct conclusion is that Andre fails the policy on verified income, and the shortfall is substantial, not marginal.

Delroy's advice is an invitation to commit mortgage fraud. A letter from a friend's company stating income that Andre does not earn is a false document, and Andre would be presenting it to a bank to obtain credit. The bank would rely on it in deciding whether to lend. That can expose Andre and Delroy to criminal liability, as well as civil claims if the loan defaults and the misrepresentation is discovered. It is not a harmless exaggeration or a way to beat an overly strict rule.

For Delroy, the professional issue is equally serious. A registered salesman must act honestly and must not assist a client to deceive a lender. The REB can discipline him for dishonest or unethical conduct, and the dealer may face regulatory and reputational consequences. Delroy should not prepare, suggest, or forward a false income letter. He should explain the bank's ratio policy, advise Andre to use verified income, and refer him to a mortgage adviser or the lender's representative. If Andre insists on submitting false information, Delroy should decline to act further in the financing and record the advice he gave. He should not give legal advice, but he must not participate in the fraud.

The first route is to reduce the loan. A larger deposit, a cheaper property, or a lower purchase price would reduce the monthly payment and the ratios. Andre should also pay down the car loan and credit card balance before applying, because reducing the $50,000 monthly debt service improves TDS materially. He could ask the bank whether a longer amortization is available under its policy, but the loan must still pass the stress test, so this may not solve the problem.

A co-borrower with verified income could strengthen the application, provided the co-borrower is genuinely liable and the bank accepts the combined income. Andre should also ensure his tax returns and bank statements are consistent and up to date, because self-employed borrowers are usually assessed on documented income. He could explore an NHT loan or a credit union if he is eligible and within their rules, but he should compare the total cost and not assume that a different lender will ignore the ratios.

The right advice is to buy within verified affordability, not to manufacture income. Delroy can help by showing Andre a realistic price range, explaining the lender's requirements, and recommending that he speak to a mortgage adviser. If Andre cannot qualify now, a savings plan and debt-reduction plan is a legitimate path to a later purchase.