Mini-Case C: (3.5 marks)
Monali and her spouse, Nitish, met while working at Hydro-Québec. Monali earns a gross annual salary of $120,000, while Nitish earns $115,000. As of March 6, 2025, Monali has provided the following information:
· Monali and Nitish, who have January birthdays, celebrated with a trip to Quebec City. Monali is 29, and Nitish is 30.
They are currently renting but have had their offer accepted (and now own!) a condo in downtown Montreal valued at $500,000.
Nitish has a Tax-Free Savings Account (TFSA) with a market value of $10,000 (contributions of $7,000 made in 2024).
They have one car worth $30,000 (with a monthly car loan payment of $500 for a remaining car loan of $12,000).
Hydro-Quebec will withhold Federal and Quebec taxes, plus source deductions of $33,000 from Monali’s gross annual salary, and $31,000 from Nitish’s.
If this offer goes through, they have been told that the monthly mortgage loan repayments would be $2,945 (this includes the mortgage loan insurance). Heating costs would be $200 a month, annual municipal property taxes of $4,000, and monthly condo fees of $300.
a) Monali and Nitish have a 5% down payment. Since this is considered a high-ratio mortgage, calculate the Canada Mortgage and Housing Corporation (CMHC) loan insurance premium they will need to pay, given that CMHC charges 4% of the mortgage amount for loan insurance.
(.75 marks)
b) What is the Total Debt Service (TDS) ratio the bank calculated? (.75 marks) TDS Ratio Formula =
Monthly Mortgage Loan Repayment + Monthly Heating Cost + Monthly Property Taxes + ½ Monthly Condo Fees + Monthly Consumer Debt Payments divided by
Gross Monthly Household Income