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Mortgage Payments Mortgage Broker
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Cascade Mortgage Capital

We are a full service mortgage brokerage based in Toronto. We offer services for both residential and commercial mortgages, as well as private lending services. For all your mortgage needs please contact us.

HOW LOSING YOUR JOB CAN IMPACT YOUR MORTGAGE APPLICATION

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HOW LOSING YOUR JOB CAN IMPACT YOUR MORTGAGE APPLICATION

If you’ve been thinking about buying a home, then you must have considered how much your mortgage will be. You might have money saved up to live off during the first few months but what happens when this runs out? Suddenly losing your job may not be as unlikely as it once was, so it’s important to keep a backup plan in mind. A sudden loss of employment can be devastating. But if you don’t tell your mortgage provider, they may refuse you the mortgage because they could assume that you won’t have enough income to make repayments. Whether you’ve already started to look for a house or not, losing your job and income could affect the mortgage approval process.

HOW DOES YOUR EMPLOYMENT FACTOR INTO YOUR MORTGAGE APPROVAL?

Lenders want to verify that you earn enough to make a mortgage payment, as well as ensure your income is stable, and predict it will be in the future. The best way to show that you are consistently employed is through your employment records. In order to qualify for a mortgage, you will need to provide the lender with documentation that demonstrates your consistent and reliable income. Your mortgage broker will guide you through how to present these documents to your lender. If the given circumstances of your employment are questionable by a mortgage lender, you may not want to invest in a property just yet, until your current employment situation improves. It is not advisable to make a decision about something as large as the purchase of a home with the uncertainty of the stability of income.

SHOULD YOU PAUSE YOUR HOME SEARCH IF YOU’VE LOST YOUR JOB?

If you’ve already qualified for a mortgage, and your employment circumstances change, you need to tell your lender. Lying about your financial situation might be considered fraud and could result in an invalid mortgage. The lender may verify your employment information closer to closing, and make sure everything is legitimate. If you are already approved by your lender, then you will be fully aware how much attention they pay on the qualification of your employment, confirming consistent income and stable employment when considering your eligibility.

WHAT CAN YOU DO TO GET A MORTGAGE APPROVAL AFTER A JOB LOSS?

Here are possible scenarios where you may be able to complete the purchase:

  • If you secure a new job so quickly and it is in the same field as your previous placement, chances are that re-qualification won’t be needed. This would mean that you would still have the ability to purchase your desired home. As you start working with your new company, it is important to confirm if they have a probationary period, this may cause an issue for your approval. If so, it’s best to contact a mortgage expert like the brokers at Cascade Mortgage Capital for help.
  • One step that may help you to have a more positive experience with your application process is to ask a financially secure person who has a good credit history to act as your co-signer. We can help you with this by providing the necessary tools and knowledge they will need in order to make an informed decision.
  • If you have other sources of income, such as business profits or investment dividends, they may be taken into account. The important factor is the consistency of these payments. Retirement plans, rentals and other forms of regular income can also be used to increase your monthly earnings.

CAN YOU QUALIFY FOR A MORTGAGE WITH EMPLOYMENT INSURANCE INCOME?

Usually, it is not possible to use Employment Insurance income in order to apply for a mortgage. Most institutions will allow you to use this type of income if you are seasonal worker or repeated employment in cyclical industries like landscaping or construction. In this situation, you’ll have to show employment documents as well as provide two years of income in the same position or company. It’s not ideal, so most mortgage lenders may be hesitant to approve your application.

WHAT HAPPENS IF YOU’RE LAID OFF?

It’s important to note that job losses are not always permanent. One example is during the COVID-19 pandemic, many people were put on temporary leave. If you have already been approved for the mortgage and closing on the house, your lender might be interested in a wait-and-see approach. In these cases, you should be able to provide us with proof that your financial situation is unchanged during this period due to the furlough. If you do not return to work before your closing date, your lender may cancel the approval and ask for a resubmission later. If you have not started the application process yet, it would be prudent to wait until you are back at work. You may no longer meet the lender’s qualifications for a mortgage because of lost or reduced income. Though it might not be possible, try to avoid accumulating debt or skipping on any payments during this time. If you find yourself needing to increase your debt load, it will affect your debt servicing ratios in a manner that could disqualify you from being mortgage approved.

TALK TO YOUR MORTGAGE BROKER

When deciding whether or not you should move forward with a certain home, it’s important to take into account your ability to afford the house. You also want to ensure that you have financing lined up as it’s an important decision. A mortgage broker at Cascade Mortgage Capital Inc. will be able to help you make a better decision when working through this scenario. They are in the best position to provide independent advice about your mortgage options. Give them a call, they are delighted to help. 

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