Growing your family is such an incredible milestone in your life. It is also the time when couples may start to consider their housing situation and think about establishing roots in a home built to raise their kids in. Applying for a mortgage during this time can be tricky, however there are options available to you.
What Happens when I apply for a Mortgage while on Parental/Maternity Leave?
When you apply for a mortgage, your lender will always ask for your most recent income information. If you are on parental leave, that means your income will look significantly smaller than it normally does. In turn, you will either qualify for a smaller amount of mortgage financing or, if your debt load is too high, you may not qualify at all. This situation is a great example of how shopping around can make all the difference for you and your mortgage.
What Can the Innovative Team do for me?
Even though the drop in your income is temporary, there are some lenders who will only evaluate your application based on what your current income level is (which will be either 55 percent or 33 percent of your typical income, depending on the length of your leave). However, other lenders have taken this unique situation into consideration and implemented policies to allow for an exception.
As a Brokerage with access to over 40 lenders, we are able to submit your mortgage application to lenders that will take 100 percent of your usual income into account (if you will be returning to work after your leave). This means you will qualify for the same amount of financing as you would if you were not on leave.
What Will I Need?
In order to evaluate your application using 100 percent of your typical income, you must provide us with a ‘return to work’ letter from your employer. This letter must include:
- Your original start date with the company
- Your return to work date
- Your job title and income information
- A clause stating that you will be returning at your full employment income regardless of previous years’ T4s or Notice of Assessments