Imagine being a foreign student with the bright idea of buying a home while in Canada, attending school, and renting rooms in your new home to offset the mortgage cost.

The situation presented itself to S., looking for residence while attending first year University. After a great sales job on Dad overseas, S. tried to purchase a brand new home here in the Nation's Capital. Dad had agreed to allow his sons (S. and his brother) access to their eventual inheritance. The kids were presently paying (or should we say Dad was paying) $825.00 per month for "comfortable" housing, but much too small for their needs.

The purchase price of the new home was $135,000 with Dad putting $80,000 as a down payment. S. presented himself to two Banks and a Trust Company, only to be told that without proven income (they were both students) they did not qualify under present guidelines for a mortgage of $55,000. Dad would have to co-sign!

Dad agreed to sign on their behalf. Then came scrutiny on Dad's position as an official of a foreign government. How stable was this foreign government? Dad would have to present his credentials in person, with no real guarantee of success. As a matter of fact, one of the lenders actually told the kids that they would never find financing in Canada. Where has common sense lending gone? Imagine all the questions, all the hassle for a first mortgage of $55,000 on a house valued at $135,000: a loan to value ratio of only 41%. The kids were both "landed immigrants", there was no call for diplomatic immunity. Where has common sense lending gone?

We were able to get the deal done through an "Equity Lender". Equity Lenders are those who use common sense, have regular rates, but charge a fee to arrange the loan simply because they realize that most Lending Institutions in this country will turn down a mortgage for S. and his Brother. The fee in our case was $750.00. They got a 6.5% one year term mortgage. They could have had a longer term for the same fee, but Dad promised to send more money next year to pay off the loan. They realize that this one time extraordinary fee is still a lot cheaper than having to fly Dad over to maybe be approved for "normal" financing.

Once again we see a place in our financial community for "equity lending". Have you got a situation where you think equity lending has helped or perhaps could help? Drop me a line c/o the Sun.