UNLOCKING THE MORTGAGE MAZE

Tips for Qualifying for a Home Loan in Alberta

by lance dawson

CONGRATULATIONS! YOU ARE THINKING ABOUT MOVING to the great province of Alberta. One of the questions you may be asking yourself is where you will live.

Do you want to rent, or do you want to purchase a new home, a condo, a townhouse, a duplex or a single-family home? Given that the rental market in Calgary is tight right now, you may be leaning heavily toward owning instead of renting. Good idea. As you embark on your inter-provincial relocation and think about buying a new home, there are several important considerations to remember when it comes to applying and qualifying for a new mortgage.

I’ve Got Cash!

Some of you will be in the enviable position of being able to pay cash and will not need a mortgage. For example, we recently had a client sell a $2M dollar home in Vancouver, pay off 1M dollar mortgage and pay cash for a $750,000 home here in Calgary. Mortgage free. Yes, what a wonderful feeling. Most people cannot live the mortgagefree dream -- not right now, anyway. Therefore, many of them will need to get a mortgage. And the goal of this article is to help you get there as efficiently and as quickly as possible.

Let’s look at several different scenarios where a mortgage will be required. After 20 years in the mortgage business,

I have seen it all and have been asked nearly every conceivable question. These include:

I Have A Job Transfer With My

Existing

Company: Can I port my mortgage now?

The answer is yes and no. Yes, because most mortgages have a clause which allows you to port your mortgage. But here’s the rub, where the “no” may rain on your porting plans.

Based on my expertise, you must still qualify for the mortgage. If you are getting a job transfer ( in other words, if you are NOT going to have any interruption in your employment), then your current bank may very well allow you to port your mortgage if you provide some essential paperwork which will enable you to jump through the qualifying hoops. This line of reasoning brings us to one piece of important advice: ask your current bank or lender. It’s still a good idea to speak with a mortgage broker.

Why? The simple answer is that you may get a better deal by paying off your existing mortgage, even if there’s a penalty, and by getting a new mortgage with better rates and terms.

I’m Quitting My Job, And I Need To Find A New One In Calgary.

Lots of buyers fall into this category. If you are leaving your job and need to find a new one here in Calgary, it will take some more work to get mortgage approval. Even if you have a large down payment, banks will want to see that you have reliable employment. I can’t outline every conceivable scenario in this article, so let’s focus on the more common ones. What if you leave your job and plan to get a new position in the same industry? If you can secure new employment here in the same line of work and there is NO probationary period, then it’s possible to get a mortgage immediately. On the other hand, if you have a probationary period ( usually three months), you will likely need to wait until you qualify for a new mortgage. There may be some exceptions to this rule; we can review them in an email or telephone conversation.

Now, what kinds of documents will you need? Three clusters of documents are usually required, and the lists look long. But once you get into them, you will see that most of the papers are readily and easily available, especially if your accountant helps (more so apply if you are self-employed).

Now, if you are an employee, you should think about assembling the following paperwork:

Employee

Picture ID: driver’s license is preferred

· Job letter dated within 30 days

· A recent year-to-date pay stub

· 2020 and 2021 T4s. Your last pay stub for 2022 or your 2022 If one is available ( Note: we only need the T4s if you use overtime income).

· A 90-day history of bank/investment statements you plan to use for your down payment.

List of assets, including the year, make and model of your vehicle.

· Void check or a pre-authorized debit form from your online banking.

· If you own other properties, we must also assemble some information about them.

Self Employed (incorporated)

· Picture ID -- driver’s license is preferred.

· Corporate Search

· Last two years of accountant- prepared company financials. List of personal assets.

· Last two years of full personal tax returns ( all pages, please), including T1 Generals, T4s ( if applicable) and personal notices of assessments. Last three months of business bank statements.

How many employees do you have?

· How do you get your clients?

· Any long-term contacts with larger companies?

Note: if you are self-employed but a sole proprietor ( in other words, you are not incorporated), then you will naturally be able to omit the corporate documents and corporate financials.

I want to emphasize that this information is intended to be a reference guide. There is no way for us to address every conceivable client scenario. For a free, no-obligation mortgage analysis, please connect with me. I look forward to hearing from you and congratulations on your homebuying journey!