Darryl & Krista spot a Real Estate listing while they were sightseeing South of the city. The listing revealed a quaint little "A" frame cottage on 22 acres of land within commuting distance of the city. Since they were sightseeing anyway, they decided to investigate. That was the proverbial straw that broke the camel's back. They just loved the solitude, the location, the price. The unit was still under construction (or horribly neglected) but oh, the price...it was listed for $40,000. Mortgage tables revealed that if they could mortgage the whole purchase price, the payments over 25 years would be just over $250 per month....oh, the price!

They decided to talk to "Dad", to help them check it out. He discovered it didn't have a washroom, no well or septic system. It was missing some windows, and one door. Reality was catching up to them, but then Dad said it had promise. Further investigation revealed that all the shortcomings could be resolved for around $15,000. They talked to the Real Estate Agent who suggested that it could be had for $35,000 "as is". It did have a survey, and all the neighbours did attest to the fact that the well would be inexpensive to drill, since the water in the area was so plentiful. Now for the mortgage.

Krista had a good job, but hubby (prior to the marriage) had declared bankruptcy.....Strike one! We could only count on her income to qualify for getting a mortgage.

The unit was unfinished and therefore fell under the auspices of the "Construction Lien Act".....Strike two! Construction loans are very difficult to get.

They were trying to mortgage more than the purchase price because they had to do some repairs....Strike three! Trying to get 100% financing was tough enough but more than 100%...impossible!

All the Banks gave them the same answer. Too many strikes! Then

Dad says: "the guy who writes in the Sun on Sundays always has good ideas, you have nothing to lose by talking to him".... That's me.

I listened to their story and agreed with the Banks' rendition of the three strikes. They got up to leave. "Just a second" says I, there are solutions!

First thing is first. You can't mortgage more than the purchase price...in the beginning. But there is nothing to prevent you from mortgaging up to 75% of what the place is worth after fixing it all up. Where are we going to get the money to fix it up? The same place we are going to get the money to buy it...Dad!

Dad's house is worth $225,000. He presently has a $90,000 mortgage. If Dad were to offer his equity (the difference between the value and the mortgage), the kids could borrow the money to buy, as well as the money to fix up the place, simply by mortgaging Dad's equity (called a second mortgage).

An appraisal of the proposed finished cottage shows that the final value will be over $80,000. So we approached a bank with the hypotheses that if the new place was worth $80,000 on completion, and it was indeed completed, would they lend Krista (alone) a mortgage for $50,000 (that's the $35,000 purchase price and the $15,000 needed for repairs)? The answer was yes. So now we mortgage Dad's house to enable the purchase to happen, buy the

place, make the necessary repairs, have the completed home re-appraised, mortgage the "A" frame at the bank, pay Dad back the money he lent you. Dad takes the money, repays the second mortgage on his house and everybody lives happily ever after. By the way, did you notice that these kids were able to buy with no downpayment... a by-product of creative financing!

For the kids, the mortgage payments (for a five year term, amortized over 25 years) amount to $350 per month. They are presently paying $858 per month in rent. Why not move?