Just like every other industry, the world of lending has been affected by COVID-19. Here are some things you should be prepared for:
Paperwork: Lenders will want all your documentation upfront and you want it to be super-organized. Proof of income, a dated job letter, paystubs and your T4 or Notice of Assessment. They’ll also want to know that you’ve been working over the last 30 days! Many people have jobs but are temporarily laid off. It this is you, this is not the time to apply for a mortgage
Self -employed: Many of us fall into this category. Times are uncertain and lenders don’t like uncertainty. If you’re self-employed you’ll want a solid and reputable Mortgage Broker on your side. Lenders are going to go over every detail of your application with a fine-toothed comb.
Like A Rock: Lenders like a solid record of employment and income. They don’t often make exceptions and they don’t like new jobs, contract positions, or probationary periods.
Private Lending: we’ve heard it’s drying up. They are scaling back in a world of uncertainty but a good Mortgage Broker may still have some contacts. In the past, this has been an option of last resort for those who couldn’t qualify for a traditional mortgage.
Investors: Given the uncertain state of the rental market and tenants' ability to pay rents during the Coronavirus crisis, investors are getting a lot more scrutiny from lenders. We’ve heard some lenders are limiting the use of a HELOC (home equity line of credit) to fund a down payment. This has been a favoured source of money for investors in the past in purchasing their next investment property.
Interest Rates: The rates are extremely low right now and the uncertainty that COVID has, and is causing in the economy is expected to continue keeping them low
Successful Closings: You’ve bought a home! Your financing is dependent on all the details in your application being exactly the same at the time of closing. Banks may re-confirm your employment prior to closing so if you’ve been laid off, you have a problem. Don’t make any big purchases or do anything that could materially affect your financial profile prior to closing.
Have A Back-Up Plan: If you’ve bought or are planning to, you may want to have a back-up plan in place. The most common request from a Lender if you financial/employment picture changes prior to closing is to ask for more security i.e. a co-signer. Do you have someone lined up who would be willing to co-sign your loan for a period of time should you need it? Better to have those discussions now than when you’re freaking out because the lender wants to pull the plug.
Questions? Call us. If we don’t know the answers, we’ll steer you in the right direction!