Guest contributor: Emmanuela Urbani, Licensed Mortgage Agent
If you are going through a separation or divorce and would really like to stay in the housing market, you might be wondering how your reduced income will affect your ability to get the mortgage you need.
What to do if you are going through a separation/divorce?
You want to stay in your house, or at the very least, stay in the housing market and avoid renting. Afterall, rent is extremely expensive these days and can often be more than your mortgage payments. Additionally, with the way the housing market is currently, once you exit the market, it can be increasingly difficult to jump back into owning your own home. While your total income will likely decrease with your divorce/separation, there may be additional income that you will be able to use. If you have children and will be receiving spousal and/or child support, that income can be used. With your reduced family income, the amount you receive for the Canada child benefit might increase as well. This income can also be used when qualifying for a mortgage. Furthermore, you can make use of homesharing and/or rental income to boost your qualification further.
What happens if your current bank has already stated that you do not qualify?
If you have already spoken to your current mortgage holder, informed them about your changing situation, and have received a hard no, do not give up. Reach out and let me help you take a deep dive into your file and your situation. Resourceful options are key. Sometimes, it can be just a matter of understanding what is affecting your qualification and brainstorming ideas to enable you to get the mortgage you need. My job is to think outside the box, help you do the math, and see how much extra is needed to get into an alternative mortgage. We will ensure to create a plan that is best suited to your individual case. Chances are, despite the additional process and requirements for this mortgage, it will put you in a better position versus renting and getting out of the real estate market.
Tips and tricks
If you haven’t yet spoken to your current mortgage holder about your existing situation, there are a few things to keep in mind. It is a good idea to stick to what is needed when disclosing your situation. Let your financial institution ask you questions in order to find out the information they require to process your file. Better yet, speak with someone such as myself first in order to be well prepared before updating your bank. Even if your current mortgage holder does not deal with mortgage agents, investigating your situation with a broker and understanding how to negotiate and explain, can help your situation.
Positioning your story and situation correctly can be almost as important as how much money you make in getting approved for a mortgage. Even if you might not be able to get a conventional mortgage, there can still be excellent options available to you. I will ask for a lot of information, documents, and will want to know the full details of your situation. This will enable me to effectively work your case and clearly explain the necessary details in order to get you approved. A financial institution cannot 'unsee' or 'unhear' information. They reserve the right to decide to pass on a file as a result of information presented in a way they do not like or are not comfortable with. My job is to see the whole picture and simultaneously ensure that what I present to the potential financial institution sets you up for success.
If you’re still unsure and would like more information on how to refinance your mortgage, reach out to Emmanuela. She has the experience and know-how to guide you through the available mortgage options and approval process.