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Rethinking Your Career? Here’s How It Could Affect Your Mortgage

The pandemic has forced a lot of people to look at their careers more critically. Is my job fulfilling? Does it afford me work/life balance? Flexible hours? Decent time off? Now, with so much uncertainty behind us, people are finding the courage to make a change as part of a trend that many are calling “The Great Resignation.”

You might just want to start working at another company. Or start a business. Or, just take some time off. Whichever direction you decide to take, it’s important to understand how it could affect your mortgage.

If You’re Looking For a New Job

Banks love certainty. For that reason, salaried employees are their ideal borrower. Typically, banks prefer candidates who have been with their company for at least a year. But as long as you’re not within a standard job probation prior to your mortgage closing date, you should be good to go. If the company you’re going to work for isn’t well known, banks might have to do a little more due diligence to assess the risk. 

If You’re Starting Your Own Business

Ideally, you’ll have two years of reported income as someone who’s self employed before applying for a mortgage. Banks have a long way to go when it comes to recognizing untraditional income streams and lending to non-salaried borrowers. Luckily, a lot of brokers have relationships with more liberal-minded lenders who are more than happy to work with borrowers in these situations.

If You’re Already Self-Employed

This past year has not been easy for small business owners, with many taking advantage of government assistance to stay afloat. Unfortunately, government assistance is not viewed favourably by the banks. They typically want to see a 6 month bank statement detailing your business revenue, and seeing government handouts could raise some red flags. 

If You’re A Professional

Doctors, lawyers, accountants, and other esteemed professional designations are perceived as lower risk. Banks aren’t looking at historical earnings as much as they’re looking at your current financial situation. If you’re a professional, there’s never really a bad time to make a change when it comes to your mortgage. 

In Sum

Don’t be afraid to make a career change if you feel like it’s the right time. But it’s important to understand how the change could impact your homeownership. Mortgage underwriting is extremely complicated, and the rules written above are just a small handful of the factors that lenders look at. Don’t try to figure it all out by yourself. Speak with an experienced, unbiased mortgage professional who can help you navigate these murky waters. 

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca

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