I had written the post below a few days ago, and didn't want to post it until I knew for sure whether or not we are approved. But now I honestly don't give a flying fig. So here it is...
It is now 5:18 pm on Friday, December 2, two days after our scheduled closing date. We are now spending our third night in hotel, and are having to extend our truck rental. With us heading into the weekend, we are probably looking at a close now of December 7, and will be out over $1,500 that we had set aside as our buffer for our first couple of months here.
What has happened over the past three days has broken my spirit, and I never thought that possible. Those people who know me well have watched me deal with heartbreaking loss:
- Bankruptcy at age 28.
- 2 divorces.
- Death of my first wife.
4. It is not about your ability to pay, and never was.
After I got off the phone I checked Paypal to see if such a report existed. Of course, there was no such report. So I called Paypal support and spoke to someone who said that they could help me generate such a report. They told me that they would have to create a support ticket to generate such a report, but suggested that I produce a comma delimited Excel file and then manipulate it to yield the information the lender was looking for. So I e-mailed Laking back to let him know that this "quick" report would take up to 24 hours to generate, and that I would get it to him as soon as I can. We requested the file from Paypal, got a message that it was in process, and then headed out to the Christmas festival.
We got back to our room at close to 10:00pm. By then Paypal, had notified us that the spreadsheet was ready for download. So I got to work, creating a very clear monthly sales report. By 1:30 am, I was finished. So I sent it off to Laking and went to sleep.
In addition to the banks, and second-tier lenders, there are a number of private lenders who are all too willing to take advantage of people in our position. This was one of the deals that our new broker brought back to us. This lender, after reviewing the value of the property, and our financial situation, was only willing to lend us 63% of the property's value for 1 year at a whopping 12%! That is almost 4 times the going interest rate for a normal credit risk. To close this deal, I would have to borrow just over 15K on my Visa, which is allowed as the lender is fully aware that this is what I would be doing. But it would be a horribly crippling deal that would mean that our monthly cost of living for a year would be almost the same as Toronto. To me, this is the epitome of predatory lender.
It Is Not About Your Ability To Pay And Never Was
We have all heard the never-ending propaganda in the media about how the Canadian banking system needs to take steps to curb Canada's out of control consumer debt problem. To read it, you would think that we are all a bunch of spoiled children with no impulse control who keep living beyond our means. What is always curiously missing from these news stories and opinion pieces, is how the government, through their continued manipulation of interest rates, have done much to create the problem. For at least the last 15 years, interest rates have been at their lowest levels in history. If that strikes you as odd, it should. It is not natural. It is the result of a deliberate attempt to lull people into a false sense of security, and to suck them into taking on more debt than they can comfortably afford. Why? Two reasons:
1. The banks make a TON of MONEY.
2. People who take on too much debt become slaves to the capitalist system.
When people are slaves, they don't complain about their working conditions, or how much tax they are paying. They fall nicely into line. And that, folks, is what the elites who run this beautiful oligarchy that we call Canada want ultimately. They want to make more money and the want you to not bother them while they do it - on your back.
The other thing you'll keep hearing when being turned down for a loan or mortgage is that the bank needs to satisfy themselves that you can pay your debts. This is complete nonsense because of how willing they are to ignore some of the most obvious pieces of evidence of such ability. For example, Optimum was only offering us a 2 year term on a mortgage for which the monthly payment was in the order of $600 per month. They knew that I had been self employed for 18 months, and that I had managed to pay rent of almost $2,500 a month in Toronto the entire time, and my personal debt had not increased. So obviously I could pay it - four times over actually. Yet they ultimately shafted us and their excuse was that we were too risky.
It just dawned on me last night, that the reason why we are being turned down, is because:
1. The lenders don't see us as being deserving of an approval because they won't make enough money from us.
2. They don't see us as deserving because, by being self-employed, we aren't supporting the system and falling nicely into line.
Think about it. If the banks were really concerned about your ability to pay them, they wouldn't be giving credit cards with $5,000 limits to university students, who are already up to their ears in debt, have no income, and no significant assets. To the contrary, a large part of the profit made by the banks depends on your inability to pay, and their ability to make you think you can pay, simply because you can pay the minimums, when you really can't pay off the debt over the longer term. How? Well take Scotiabank's "You're richer than you think." ad campaigns over the last several years. They are aimed at making you think that you really can afford that $25,000 kitchen reno, or that trip to Italy. In reality, most Canadians are poorer than they realize - having very few hard assets, like collectibles, or gold and instead having highly leveraged assets that are vulnerable to market swings like real estate, or stocks, and a TON of debt, that they have been sucked into taking on because it was so cheap. Kids today have only known low interest rates, their entire lives, so they think that how it is now, is how it will be later. They lack the historic perspective to see what is coming - a massive rise in rates.
Yes, but won't the banks lose big time if rates go up and real estate comes crashing down, with people defaulting left right and centre? Well, yes - if the government lets them fail and doesn't bail them out. But the government will bail them out. You can bet on it. And where will the bailout money come from? From you? Ding! ding! ding! WE HAVE A WINNER!!
So just remember, when you apply for a loan, what the bank really wants to know is:
1. Are you so wealthy that they can make money from you in other ways, by offering you financial products other than the mortgage?
2. If you are not that wealthy, are you the type of person who will will only make the minimum payments, so that they can make money from you forever, on credit cards, the mortgage, and other things?
If you are a frugal person who always pays off their loans, doesn't believe in making their money from stocks, and would rather create it by running a business, and all you have to offer them is a mortgage debt, chances are they won't want to deal with you because you just don't give them enough money to be worthwhile.
It is that simple. Now it all makes sense.