Moving to a new city for a job can be an exciting adventure, but it can also add complexity to your mortgage approval process. Understanding how job relocation affects your ability to secure a mortgage is essential for planning your move and purchase effectively. This guide will explain the impacts of job relocation on mortgage approval and offer tips to navigate the process.
Understanding Job Relocation
Job relocation can mean either a transfer within your current company or starting a new job in a new city. Each scenario can affect your mortgage application differently. Lenders will evaluate the stability of your employment and your ability to make consistent mortgage payments.
Internal Transfers and Government Agencies
If you are being transferred internally within the same company or through a government agency (like healthcare or the military), the process is usually straightforward. A job letter confirming your new employment details is typically sufficient for mortgage approval. This letter should outline your new position, salary, and start date.
Starting a New Job
If you are quitting your existing job and starting a new one upon arriving in the new city, the process can be more challenging. The biggest issue is that you will usually be on probation and unable to provide a pay stub proving that you are actually employed there. Even if you are staying in the same industry, approval can still be a challenge due to the fact that different provinces have different pay scales for the same type of work.
Cross-Province Commuting
Other issues arise when someone wants to buy a property in a different province than the one they work in (for example, individuals in the oil and gas industry commuting between Alberta and Atlantic Canada). Generally, this is not an issue for qualifying purposes, as long as it can be proven that you are able to work in a different location than where you live. Also, if you are able to work from home, then location is irrelevant.
Strategies for Getting a Mortgage During Job Relocation
While job relocation can add complexity to your mortgage application, there are strategies you can use to improve your chances of approval:
1. Obtain a Job Letter
If you’re transferring within the same company or through a government agency, get a detailed job letter. This letter should confirm your new role, salary, start date, and that your employment is not subject to a probationary period.
2. Plan for Probationary Periods
If you’re starting a new job and will be on probation, plan accordingly. You might need to wait until after your probation period ends to apply for a mortgage. Alternatively, you can work with a co-signer to strengthen your application.
3. Provide Detailed Employment History
If you have a strong employment history in the same industry, provide detailed information to the lender. This can help reassure them of your job stability and future income potential.
4. Save a Larger Down Payment
A larger down payment reduces the amount you need to borrow, making you a less risky candidate. This can offset concerns about your new job and probationary status.
5. Work with a Mortgage Broker
A mortgage broker can help you navigate the complexities of securing a mortgage during a job relocation. They have access to multiple lenders and can find the best options for your unique situation.
Frequently Asked Questions on Job Relocation
1. Can I get a mortgage if I’m relocating for a job?
Yes, you can get a mortgage if you’re relocating for a job. If it’s an internal transfer or a government agency move, a job letter is usually sufficient. If you’re starting a new job, the process can be more challenging, especially if you’re on probation.
2. Will my new job’s probationary period affect my mortgage application?
Yes, being on probation can affect your mortgage application because lenders see it as a period of employment uncertainty. Planning your application around your probation period or using a co-signer can help. Link to probation blog.
3. What if I’m relocating to a different province?
Relocating to a different province can complicate the process, especially if there are different pay scales. However, if you can prove your ability to work in a different location or work from home, this usually won’t be an issue.
Conclusion
Job relocation can complicate the mortgage approval process, but understanding its impact and employing strategic approaches can help you navigate these challenges. By obtaining the necessary documentation, planning around probation periods, and considering options like a larger down payment or working with a mortgage broker, you can enhance your chances of securing a mortgage.
If you have any questions or want to explore this in further detail, please feel free to reach out to me, Alex Lavender. I would be more than happy to assist you, and there is no cost or obligation for a meeting with me.