Buying a new home in Canada is a commitment you will most likely be making for the next 20-30 years of your life, and as such, not something that you want to enter into lightly. Just like this is a big decision for you, it is equally important for the lenders who you apply to, that they also make the right decision. Your employment history and residence history are important variables in a mortgage lending decision.
In this article, we look more into the importance of your employment and residence history. Both of these factors will play a big part in determining your stability as a potential borrower; they tell your lender if you have the stability needed to be a good customer, who can be relied upon to pay on time.
Having held the same job for at least two years is helpful, the longer, the better. The same principal applies to the time you have lived at your current address. This demonstrates to the lender your overall stability as a borrower; they like to know that you have history with you company and that you aren’t a job hopper! Don’t worry if you are applying for a mortgage because you have relocated for work and as such have only a few months in your current position, as long as you can show that you have help employment for over the two years in your previous position, that is also acceptable. What will also matter is that your job is permanent as well, again this demonstrates stability and it also shows that you have a solid ability to pay.
A prospective lender will look into where you have lived for the previous two years. If you have moved around a little, then you will need to cover at least two years of address history in your application. These will be verified, more often than not through credit bureau records. The borrower might also look at the amount you have paid in housing costs previously in relation to your potential mortgage payments as well.
It is important that you are able to document your employment history, whether or not you are employed, self-employed or otherwise, having proof of your position, along with any associated income is imperative. It is also likely that your employer may get a call from a borrower who is carrying out verification checks. They may also need confirmation in writing of your salary or pay, along with your job title and start date.
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Why employment and residency history is important
Banks and financial institutions care about your employment and residential history mostly for one reason: they want to ensure that they are paid back on time. Lenders work on the basis that applicants who have worked in the same industry or job for a number of years are at less of a risk of losing their positions, and of course people who are in work, have a much better ability to pay their debts off, on time. Of course, every lender is different, and some may place more importance on other factors, such as income for example than they do on employment or residence history.
Are You New to Canada and Looking to Buy Your First Property?
If you have no residential or employment history in the country, don’t worry! You are still able to qualify for a mortgage, whether it is just for a holiday home, or perhaps on a more permanent basis. Buying your first home in Canada is often considered a vital step to being established in this country. You may wish to finance the purchase of a house without having obtained citizenship; there are various options available which will allow you to do this.
If you are looking to make a down payment which is below ten percent of the total value, then it’s likely you will need to obtain an international credit report. If you are coming from either the UK or US then this is a straightforward request, if you are coming from anywhere else, then you just need to get in touch with your bank or any other financial institution who can advise the best way to obtain such a report.
Every lender will have a slightly different set of rules and requirements but as a general rule, you will almost always need to show that you have landed immigrant status, a valid work visa or proof of your permanent residency. You will also need to show at least three months history from within Canada for your employment too.
In summary, the longer, the better with regards to your employment and residence history, but as with everything in life, there is a gray area with some of the rules as it is down to each individual lender as to what their individual stipulations and criteria are set as.