When your family is growing, the idea of moving into a bigger house may be at the forefront of your mind. But if you are on maternity leave, your ability to get approved for a mortgage may be hindered due to your smaller household income. Here are a few questions to keep in mind, from Rakhi Madan Mortgage Agent, if you are considering applying for a mortgage while on maternity leave.
When will you be returning to work?
If you will be returning to your work in ninety days or less, your current income will not be a factor–it’s your income once you get back to work that will be considered during the mortgage application process. While 90 days is the smallest amount of time, some lenders may accept your work income even if you are on leave for up to six months.
If the remainder of your maternity leave is longer than 90 days in length, there is a high likeliness that the income that will be considered on your mortgage application will be whatever you receive on employment insurance. This is likely going to leave you with a smaller possible mortgage amount.
How can you prove your income to a lender?
Since you are currently away from work, you will have to show proof to lenders you apply to that you will be returning. On top of providing your last year’s T4 slip to prove your previous income (if you are a salaried employee), you should also ask your employer for a Letter of Employment. This letter should state when you started working for the employer, when you expect to return, your annual income, and how many hours per week you work (including consistent overtime hours, which you should provide proof of with two years’ of T4 slips).
If you are concerned about your chances for mortgage approval while on maternity leave, please contact our Toronto Mortgage Broker to get us working for you.
