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Can I still get a mortgage If I get laid off?

Can I get a mortgage if I get laid off?

As babies, we are born with two fears. We are born with the fear of falling and the fear of loud sounds. The funny thing about the fear of falling down is that kids are absolutely fearless of getting hurt. If you tell a kid to do a handstand, they will attempt it. The thought of falling on their face rarely crosses their mind. As we get older, doing a handstand becomes harder. The fear of falling over becomes more real. You correct yourself before you even attempt, which inevitably makes you fall over. As kids, we do not take no for an answer. It’s not in our vocabulary. We find a way to get past whatever it is that stands in our way. We believe that there are multiple options to get from point A to point B.

In the middle of the pandemic, Canadians across the country have experienced a fear they hoped would never come true. Some have been let go from their jobs amid the crisis, which may have caused financial hardship. For those that were thinking about buying a house, this can cause concern for the future of their application. Fortunately depending on the situation, applying for a mortgage may still be possible.

Informing the Lender

Getting laid off is always a challenging and tricky situation. In the midst of a pandemic, there is no guarantee when things will return to “normal”, and what that really entails for anyone. Some employers may have gone into the pandemic telling laid off employees they will be rehired after the situation ends. Other employers may have let employees go with no guarantee of a rehire. When applying for a mortgage, it is best to inform the lender right away if you have been laid off. This can surprisingly give you more options.

Jointly Qualify

Borrowers that are applying for a mortgage jointly, may still qualify for a mortgage. Many spouses can and have applied for mortgages where one partner works and the other does not. A situation of having one partner laid off and the other is no different. As long as the employed partner has a steady and reliable income, there should be no problem with getting approved. However, the mortgage amount may be a different story.

When one partner gets laid off, they may not be able to qualify for the original loan amount. The overall household income is reduced when one partner is laid off, which means the eligible amount to borrow will be lower. If the partner that was laid off is receiving EI, they may be able to contribute to the application still. You can read more about that in our recent blog post here and more about qualifying below.

Single Income

If the mortgage application only has a single form of income, there are a few ways borrowers may be advised to handle it. Borrowers may choose to pause their mortgage application. With no guarantee of when they will return to work or have a steady income, they may be seen as a high-risk borrower. Borrowers may also have the ability to use different forms of income to qualify. Borrowers that receive alimony or child support cheques regularly can include those as a form of income. The alimony or child support must be expected to continue on a regular basis for the foreseen future to qualify.

Additionally, employment insurance and social assistance payments can be included if there is a regular pattern of receiving them. Seasonal employees, like a fisher, would have to provide a history of receiving EI or social assistance. Moreover, regular disability payments can be used as a form of income to those that qualify. Providing proof of disability payments and continuation for the future can support the source of income. Different forms of income can be used as a supplement or support to a borrower’s regular form of income.

What’s next?

Borrowers should discuss their individual situation with an unbiased mortgage professional when applying for a mortgage. Being laid off does not automatically mean qualifying for a mortgage is out of the cards. Borrowers that are applying jointly for a mortgage will still be able to do so under the one income. This could mean a lower qualifying amount since the household income is lower. Other forms of income can be used as a supplement or support to a regular income to help a borrower to still qualify.

Unfortunately, there is a chance that you may have to wait to be approved for a mortgage. However, your mortgage broker will help you create a financial plan for when things return to some new normal. Planning early saves heartaches and headaches later on. Mortgage professionals will give unbiased advice to aid the borrower’s current situation amid the crisis. When you are interested in the mortgage options available to you, give us a call at Clinton Wilkins Mortgage Team! You can give us a call at 902-482-2770 or get in touch with us here!

1. The “Holiday Cheer Giveaway” (the “Contest”) runs from 08:00:00 a.m. AST on December 1st, 2020 (the “Contest Starting Date”) to 5:00:00 p.m. AST on December 11th, 2020 (the “Contest Completion Date”). The Contest will have one (1) grand prize draw for a cash prize of $2,200.

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Normally you can find this at retail stores across Halifax and Dartmouth, but we wanted to make it even easier for you to get a copy.

The entire guide is available online to view or download, and to make sure you’re staying safe at home, you can now request a print copy by mail, free of charge, anywhere in Nova Scotia!