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How Does COVID-19 Impact My Mortgage?
April 1, 2020 | Posted by: Adrian Schulz - Winnipeg Mortgage Broker: Rental Property Financing and Commercial Mortgage Solutions
How Does COVID-19 Impact My Mortgage?With the COVID-19 pandemic spreading across the globe, more people than ever are being laid off from their jobs and are unable to make their mortgage payments, or think that their mortgages might be in jeopardy because of the current global economic and health crisis. On top of that, what if you were planning to buy a home and suddenly don’t have your usual source of income? These are unprecedented times, but luckily the Canadian housing market has some general protection mechanisms in place to account for situations like this one.
What happens if I have a mortgage and can’t pay it?
If you already have a mortgage, but can’t pay it, the smartest thing to do is contact your lender immediately and let them know that you are having an issue. For the most part, mortgage lenders don’t want to see you lose your home—or for them to lose out on their investment. After all, they’re banking on you being a safe risk.
Many lenders across Canada are taking these new circumstances under advisement, and could even be prevented from foreclosing. Talk to your lender as soon as possible. You may qualify for payment deferments.
What happens if I’m mid-mortgage application but I’ve lost my job due to COVID-19?
Here’s the bad news: you can’t hide the fact that you were laid off. Mortgage lenders typically verify your income during the application process and potentially again later on, when it’s closer to closing. You should be honest with them—you won’t be the only person who is running into this problem, and they’re likely going to find out anyway.
In some cases, if you don’t have a spouse with steady income, large reserves of savings or other assets that would make mortgage lenders think you’re a safe bet, you might have to pause the application. Some lenders want you to be at a new position for up to six months before they’ll start reconsidering your application.
In rare cases, some lenders may be willing to accept proof of unemployment income as sufficient, provided your former employer confirms you would otherwise have permanent employment were it not for the current pandemic. Such exceptions would be handled by lenders on a case-by-case basis, but it’s worth looking into.
Ultimately, this doesn’t have to be a life-altering event, although it’s certainly disappointing. Our best advice is to let your lenders know what’s happening as soon as possible, look for new employment and accept that you may have to wait on purchasing a home until more stable times.
Can I apply for a mortgage without current income?
In general, you can absolutely apply for a mortgage without a current job—people do it all the time. However, unless you have the cash up front, the mortgage companies will look to your spouse’s or co-signer’s income to determine how much they can lend you without significant risk. If you’re out of a job, generally speaking, the amount for which you’re approved will be much lower than if you had a dual-income situation. The amount may not be enough to cover the home you have your eyes on.
If your spouse or co-signer also doesn’t have any current income, it’s likely best to wait—you probably won’t be approved for much, if any money.
For more information about how your mortgage might be impacted by the COVID-19 pandemic, reach out to Adrian Schulz, Mortgage Agent today.
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