Subject: Do you know your client? 🤔

Maximum purchase price they will qualify for, all while putting down the least amount of money possible...

March 2021 | Vol. 3

A monthly newsletter brought to you by yours truly, Mejer Dhillon

Know Your Client

The Newly Married Millennials!

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Let’s get right into it... Today’s clientele group:


The Newly Married Millennials!


Who are the Millennials?


Millennials are individuals who were born between 1981 and 1996, a 15-year time span. In 2021 millennials range between the ages of 25 and 40 years old. According to Statistics Canada, millennials are earning more than previous generations did at their age: median after-tax income is $46,000 which is about 32% higher than both baby boomers and Gen Xers.


Traits to quickly note about millennial homebuyers:


They are usually;


  • First-time buyers

  • Single or newly married

  • Under 40 years of age

  • Usually have a couple of credit blemishes from their early 20s (not a deal-breaker)

  • Blue-collar workers (or not)

  • Need ALL the handholding


"What's the maximum purchase price I qualify for, all while putting down the least amount of money possible?"


Generally, millennials all tend to have the same approach when buying real estate and getting a mortgage. They want to know the maximum purchase price they will qualify for, all while putting down the least amount of money possible. And honestly, it’s not entirely a bad approach, it’s a reality that for many often makes sense.


Based on the median after-tax income millennials in Canada are earning, which is $46,000, we will assume that the newly married millennial couple earn a combined household income of $92,000


With an annual household income of $92,000 the maximum purchase price they can qualify for, all while putting down the least amount of money possible, is $450,000. The minimum down payment required in this scenario would be $22,500 which is equal to 5% of the purchase price.


Take a look at the breakdown of this mortgage;


5% Down | 95% LTV (Loan-to-value) 


Purchase Price - $450,000


Down Payment - $22,500 (5%)

Loan to Value - 95% (High-Ratio Insured Mortgage)


Mortgage Amount - $427,500


Mortgage Default Insurance - $17,100 (4% of mortgage balance)


Total Mortgage Amount - $444,600 (Including Mortgage Default Insurance)


Amortization - 25 years (No 30-year amortization for insured mortgages)


Interest Rate - 1.35% (Variable Rate)


Monthly Mortgage Payment - $1,746 (Principal & Interest)


The ULTIMATE lesson, not only today but every single day, is universal across all businesses...


KNOW YOUR CLIENT.


I write blogs and create all other types of content about the Canadian mortgage industry. Whether you are a finance or real estate professional, investor, or a first-time homebuyer, my goal is to become your ultimate resource for all things mortgages.


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