Get a Mortgage While Laid Off

Your Mortgage Guide

Can I Get A Mortgage While Laid Off? The Facts.

It is difficult to get a mortgage while laid off in normal times. With a large number of Canadians are out of work and economic uncertainty persists, getting approved for a mortgage is going to be much harder. 

The sudden change in the economic conditions due job loss has left borrowers financially hard-pressed. Lenders are unwilling to allow more credit to already-stretched borrowers fearing defaults and bad loans. As businesses and offices remain closed, they are unable to verify the incomes of applicants. This has led to strict lending policies preventing any chance to get a mortgage while laid off.

If you still have a job but on furlough until the lockdown in place, you can get a mortgage loan. If you have been laid off, it is a challenge. My professional experience as a mortgage advisor has led me to speak with lenders, including TD Bank, Scotia Bank, First National and Merix Financial, and Coast capital savings, on behalf of clients and get them a mortgage with or without a job.

Difficult To Get A Mortgage While Laid Off:

One lacks a regular source of income when he is unemployed and this inhibits his ability to repay the loan. A loan turning a bad debt is the worst fear of a bank and this dissuades it from giving loans to those without a job. Thus, it is difficult to get a mortgage while laid off.

Why do lenders want their borrows to have jobs when they have the property  as collateral? Yes, they do have the house as security to cover any loss. But foreclosures are the last thing banks want to do. Selling a mortgaged house is time-consuming and lenders are wary of legal, procedural hurdles.

Having a job, on the other hand, assures a regular income enabling the borrower to pay off his mortgage as scheduled. Therefore, lenders give preference to those with employment. 

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COVID-19 Makes It Tough:

The COVID-19 disruption has resulted in a 3-million job losses in Canada pushing the unemployment rate to the highest since December 1982. Most Canadians are at home without work and facing uncertainty about the next paycheck. This weighs heavily on the psyche of lenders, and it becomes tough to get a mortgage while laid off. 

Even if you have assets to back up, cash in the bank, or adequate financial strength, the absence of employment makes your application subject to greater scrutiny. Lenders look into financial history, credit history, income and expenditure pattern, and the ability to secure a gainful occupation. Enhanced scrutiny of an application unleashes a wave of uncertainty, impacts your chances, and the ensued delay can even kill a deal.

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Can I Get A Mortgage While Laid Off Due To COVID-19?

Banks across Canada have tightened loan norms in the wake of the coronavirus pandemic, which caused an economic collapse.

However, while lenders dither to allow mortgages fearing defaults, they also search for suitable borrowers. If you are temporarily laid off, you will have a regular income once businesses reopen. If your job is no more, still you have a chance to land another job. And once you have a job, you can apply and get a mortgage. 

Those already with a mortgage should take advantage of the deferral programs for now. Once this runs out, let me know to explore the best possible refinancing option or to get a second mortgage. As a mortgage advisor, I can help you connect with the best possible lenders providing loans to borrowers with similar conditions. So if you have been laid off, schedule a call or shoot me an email. I will speak with lenders on your behalf and get you some more information on that. Subscribe to our newsletter to stay updated on mortgage lending in Canada.

Overcoming Difficulties To Get A Mortgage While Laid Off

A borrower’s ability to repay the mortgage is the foremost concern for a lender. Banks approve an application only if they are sure about the repayment ability. Here are three ways you can maximize your chances of getting a mortgage while laid off. 

  • Increase your share of down payment. A lower mortgage amount indicates the higher ability to afford more payments, reduce any potential risk of a bad loan, and entice the bank to consider an application.
  • If your partner is in a job, self-employed, earning a steady income, or in a furlough, have them as co-applicant to get a mortgage while laid off. 
  • Find out lenders that are more flexible to offer loans to borrowers affected by the Coronavirus crisis. Let me know your exact financial conditions, I can help you connect with such lenders.

Are You Laid Off Mid-Mortgage Application?

Losing your source of income negatively impacts your eligibility for a mortgage. However, don’t try to hide it, as it is part of the lenders’ policy to verify the employment status before sanctioning a loan. You may be blacklisted for hiding it.

When you are unsure of being rehired or unwilling to commit for monthly payments until the next job, you may hit the pause button. But losing a job does not mean your mortgage approval is completely off the table. Yes, still you have a chance. If you have applied jointly and the co-borrower has a steady income, you may get a mortgage while laid off. If you have cash in the bank to afford a higher down payment, you can have it. 

You may produce a letter from your employer explaining the reasons that resulted in job loss. For example, those losing jobs due to social distancing requirements at their offices can convince lenders.

Let Us Help:

I have been assisting Canadian homeowners with mortgages for over a decade and know which banks will approve your loan application considering your current employment situation. If your job loss is temporary, let me know so that I can help you get a mortgage while laid off. In case you have to leave your job in the middle of the mortgage application, let’s find out options to move things forward. 

Know Your Mortgage Options

Talk to Vaneesh Dass from Your Mortgage Guide and Maximize Your Chances of Getting One.