Whether you had started to search for a new home before the pandemic struck or are just now beginning to think about your options in the light of Covid-19, you might be wondering whether a new mortgage is even possible right now. Well, rest assured that it is possible, but with several caveats, and a mortgage broker is absolutely the best person to help explain these to you:
What you need to know about getting a mortgage:
Experts are telling us that most of Canada’s big banks are continuing to finance home purchases irrespective of the current state of the economy, but they are being extremely cautious and conservative with what they are lending, and to whom. No longer are the big 5 making exceptions on debt-service ratios, and discounts that previously existed on prime and variable mortgages have all but been eliminated.
What if you’re self-employed?
Depending upon what industry you work in, if you’re self-employed you’ll certainly face more scrutiny from banks and may struggle to get a mortgage as things currently stand.
Proof of employment is now required
For mortgage approval from any bank now, an updated letter from your employer is mandatory, and in many cases, banks are calling up employers to confirm that an applicant still has a job. Banks are also asking that those applying for a mortgage produce recent pay stubs up to two weeks before a deal is set to close.
What do the experts say?
Experienced mortgage brokers are urging their clients to ensure that their files are in order and up-to-date, and that mortgage conditions are met quickly, to help secure and close deals. While many mortgage brokers have closed their office doors to clients, many can be reached by telephone and email, and are keeping their working hours as close to normal office hours as possible, given the new demands the current crisis is placing upon everyone. So, if you’re not entirely sure where you stand with respect to your mortgage application, you can reach out to a broker and seek their expert and experienced guidance.
Mortgage brokers are also warning applicants that deals are taking longer to fund right now due to the sudden and sustained influx of applicants, which were recently reported to be up by 400%. This is due mainly to home buyers, and homeowners seeking to refinance, wanting to take advantage of lower fixed interest rates. Be prepared to wait up to 10 days or longer for approval on financing, and anything up to a month before you get any cash in your pocket.
These are unprecedented times for businesses, banks and the economy, but if you’re stuck wanting to purchase a home or refinance your current property, you do have options, it’s just that they’re not what you are used to, and they are subject to change. Work with an experienced mortgage broker who can guide you through the process under the new rules and help you get the best result for you and your circumstances.