Screening Bingo

[Stephen E.]

It is screening time again and I have an interesting one that focuses on income.

I have an applicant for a recently renovated high rise condo who is a retired librarian with no dependents. She has spotless credit, her only reported debt is a car loan for a late model Toyota Corolla. Her credit score is 795. The downside is income, which is a bit low. She says her gross income is $36,000. Rent is $1,079 or $12,948 which means income is 2.78 times rent, not three times. So this is a bit marginal from that standpoint.

I am inclined to approve but I wanted to see if you can see holes in my logic. All of her income is rock solid pension income from government pension sources (CPP, OAS) which rise by CPI each year, plus a local government pension through the Ontario Municipal employees retirement plan, also a government source. I think this is more stable and less risky than someone who had say $45,000 income but was privately employed. Second, she is splitting with a partner and selling a house in an up and coming area. They bought for $100,000 and are listed for $239,000. So even if you assume just $139,000 gain she is still in for $69,500, which she plans to add to retirement savings. Income can be seen as a plus in that sense in that she is unlikely to buy again on her own. So she will be renting in retirement.

My understanding is that the provincial government here is against using three times income as a cut off. They have argued that different groups allocate a greater proportion of their income to accommodation costs. I can see that a relatively frugal retired person would fit that bill. Also, she has lived in her present home for seventeen years, so seems unlikely to move on a whim. She says that she is a long term tenant. She has a pleasant demeanour and was cooperative with the quite detailed information requested on the application form.

So what do you think, to rent or not to rent? I ran credit yesterday and am copying documents for proof of income today.