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When it comes to your career, your mortgage approval could be at risk if you make a bit of a change—aka like get a new job—before you've closed on your home.

Can you change jobs before your mortgage closes?

<p id="">Life can be unpredictable: a new path can light up, a door to a new opportunity can open, or bad news can hit, whether it’s a good time or not. Life happens, but it can make the mortgage application process tricky.&nbsp;</p><p id="">While there are occasions to celebrate–like when you’re approved for a mortgage, when you’ve put an offer in for a home, and again when your offer is accepted–you have to remember that your mortgage isn’t final until you <a href="https://www.pine.ca/blog/mortgage-101-the-key-terms-you-need-to-know" id="">close</a> on your home.</p><p id="">And, when it comes to <a href="https://www.pine.ca/blog/what-to-know-about-getting-a-canadian-mortgage" id="">getting a mortgage in Canada</a>, your employment history and income are two of the most important factors your mortgage lender looks at when reviewing your application. When there are changes to your employment, whether you're in the driver’s seat of the change or a passenger, your mortgage could be at risk if this change happens before you’ve closed on the home.</p><p id="">While every situation is unique and you’ll be assessed based on your unique circumstances, it’s generally recommended not to change jobs during the application process or before your mortgage closes.&nbsp;</p><p id="">There are some cases, however, when a change in employment usually will and usually won’t impact your mortgage.</p><h2 id="">When changing jobs doesn’t affect your mortgage</h2><p id="">Mortgage providers usually look for two years of employment history when reviewing your application history. A two-year history is used to show that you have a stable stream of income and prove you do have the ability to pay your mortgage.</p><p id="">Your mortgage likely won’t be impacted if:&nbsp;</p><ul id=""><li id="">You’re promoted at your current job and your income increases at the same time.</li><li id="">You’ve moved up in your career and are offered a full-time and permanent position with another employer that comes with a higher title and salary</li></ul><p id="">Career moves like these are usually a positive sign to your mortgage lender and demonstrates your ability to maintain a stable career, where you can work your way up. Plus, a move like this won’t normally affect your ability to afford your payments, so your mortgage application usually won’t be at risk.<br></p><h2 id="">When a job change can<em id=""> </em>put your mortgage at risk</h2><p id="">On the other hand, there are situations where your mortgage might be at risk of being pulled&nbsp; due to a job change. Specifically, if you happen to be on a probation period for a new role it is highly unlikely your lender can approve you for a mortgage. Other changes that can put your mortgage at risk are:&nbsp;</p><ul id=""><li id="">You switch to an entirely different industry or profession. Not only would you likely be in a probationary period, which might add a bit of instability to your income and employment in any job change scenario, but it’s harder for your mortgage lender to be certain that you have job security.&nbsp;</li><li id="">You change your pay employment type–like switching from a full-time to a part-time position or from a permanent position to a fixed-term contract.</li><li id="">You change your income type–like switching from a salaried position to freelance or to a position that is commission or performance-based. These incentive-based pay structures might mean you could have a higher income, but they might also be seen as unstable. In these cases, it’s harder to prove your income and show you can meet minimum income thresholds and that you can still afford your mortgage.</li></ul><p id="">If you do change jobs at any point before your mortgage closes, it’s important to remember you’re legally required to inform your mortgage provider.&nbsp;</p><h2 id="">How to get a mortgage without two years of work history</h2><p id="">When you’re missing two years of work history–or if, perhaps, you were in school for two years prior to applying–it’s not impossible to get approved for a mortgage. Instead it's important to show your lender that you’ve maintained a steady income over the years and show that you can afford the mortgage you’re applying for.&nbsp;</p><p id="">For instance, if you’ve moved jobs more than once over a short period of years, or job hopped in other words, you can still prove your ability to manage your mortgage payments by demonstrating that you’ve maintained a steady income and have remained employed throughout that duration of time.&nbsp;</p><p id="">In other cases, it will be beneficial to have a strong and high credit score, while also offering up a larger down payment to secure your home.</p><p id="">While it’s not impossible and options are available, it’s important to note that the interest rates you qualify for might also be impacted. Be prepared with the possibility that you might qualify for a mortgage with a higher interest rate without a two year work history than you would have if you had that history.<br></p><p id="">Before making changes, we recommend talking through your options with your mortgage provider to work through the decisions you have to make. At Pine, our advisors will talk through all the options at your disposal and the potential impact of each to help you make the best decision you can, and ensure your <a href="https://apply.pine.ca">home buying journey is stress-free and hassle-free</a>.</p>

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When it comes to buying a home, your first or next, Canada’s mortgage stress test is a necessary step you'll go through to get you qualified for a mortgage.

What is the Canadian mortgage stress test?

<p id="">Whether you’re buying your first home, your next investment property or even renewing your mortgage, Canada’s mortgage stress test is a necessary step to complete before you’re able to get qualified for a mortgage. However, this isn’t your run of the mill test you have to study for: it’s a gauge of your finances created by the Canadian government to determine if you can pay off your mortgage, if interest rates were to rise.&nbsp;</p><p id="">And while it’s been around for years, many Canadians have no idea what it is or understand how it works.&nbsp;</p><h2 id="">What is the stress test?</h2><p id="">The simplest way to explain the stress test is seeing it as an assessment to determine your ability to pay your mortgage. Being a homeowner comes with very high costs over an extended period of time. The government wants to protect you to ensure you don’t default, even in times of sudden financial stress or changes, like losing your job, interest rate increases, a financial emergency, etc. Ultimately, you’re proving that your finances are able to handle this long-term commitment based on the minimum qualifying rate.&nbsp;</p><h2 id="">How does it work?</h2><p id="">When you apply for a mortgage, your lender will determine if you pass the stress test by using a higher rate than your approved rate, against your finances. This higher rate is also referred to as the mortgage <a href="https://www.osfi-bsif.gc.ca/Eng/fi-if/in-ai/Pages/mqr-nfo.aspx" id="">qualifying rate</a>. This rate is standardized by the <a href="https://www.osfi-bsif.gc.ca/Eng/Pages/default.aspx" id="">Office of the Superintendent of Financial Institutions</a> (OSFI), who sets out this rate based on the average 5-year fixed rates across the big banks in the country.&nbsp;</p><p id="">This tends to result in being able to borrow a smaller sum of money so lenders have higher certainty and security that you can repay it all.&nbsp;</p>

<h2 id="">Putting the stress test into practice</h2><p id="">It’s important to understand that the mortgage qualifying rate isn’t a real rate you’ll see on your mortgage documents: it’s an inflated, hypothetical rate that’s created to lower the amount of the mortgage you qualify for and create added lending security for mortgage brokers and banks.</p><p id="">For example, say you have a 4% fixed rate approval, the stress test will measure your finances against a 6% qualifying rate.&nbsp;</p><p id="">If you have a 2% variable rate approval, the test will benchmark you against a 5.25% rate.&nbsp;</p><figure class="w-richtext-figure-type-image w-richtext-align-fullwidth" style="max-width:1450px" data-rt-type="image" data-rt-align="fullwidth" data-rt-max-width="1450px"><div><img src="https://uploads-ssl.webflow.com/610bf2053f1224eac60b56b0/6386233fa9c68bdbd94cee05_Pine_Stress_Test_Practice_Table_final.png" loading="lazy"></div></figure><p id="">For example: Let’s say you wanted to borrow $400,000 at a rate of 1.78%. You would have to prove you can afford a mortgage payment of about $2,385 per month (which is an interest rate of 5.25%), even though your actual monthly mortgage payment&nbsp; of $1,650 (with your actual offered interest rate of 1.78%) would be a lot lower.&nbsp;</p><h2 id="">Is there any way around the stress test?</h2><p id="">Understandably, the stress test can put limitations on borrowing for many aspiring homeowners. So you may be wondering, is there a way around it? The answer is no. The Canadian stress test is a requirement for mortgage lending at major financial institutions.&nbsp;</p><p id="">If you’re worried about passing the stress test, you may want to <a href="https://www.pine.ca/blog/getting-a-co-borrower-or-guarantor-for-a-mortgage-is-it-right-for-you" id="">consider getting a co-borrower or guarantor</a> to help with the approval process.&nbsp;</p><h2 id="">Don’t stress, it’s just a test. And you can prepare.&nbsp;</h2><p id="">With rising interest rates and Canadian mortgage regulations changing, the stress test may seem more intimidating than ever. But it doesn’t have to be.&nbsp;</p><p id="">Being prepared with a financial plan to save more money for a downpayment and increase your earnings can lift the weight of the stress test. And <a href="https://wowa.ca/calculators/mortgage-calculator" id="">using a mortgage calculator</a> can help you benchmark the stress test in advance before applying for your mortgage approval.&nbsp;</p><p id="">And if one-on-one time with a mortgage advisor is the next step in your journey to home ownership, feel free to <a href="https://apply.pine.ca/start" id="">connect with one of Pine’s mortgage advisors</a> for any questions you might have about your finances or how to get approved.</p>

Woman standing in a room surrounded by equipment and furniture looking away from the camera.

There are some crucial mistakes first-time home buyers make and it’s important to avoid these to prepare you for your new journey of home ownership. 

If you’re rushing into your purchase before, you could be living with regret for a long period of time. So don't make these first-time home buyer mistakes. 

The 10 mistakes to avoid as a first-time homebuyer

<p id="">Buying your first home can come with a lot of excitement. But oftentimes, we overlook the amount of work that goes into preparing for the home-buying process. And if you’re rushing into your purchase before considering some key factors, you could be living with regret (and debt) for a long period of time. There are some crucial mistakes first-time home buyers make and it’s important to avoid these to prepare you for your new journey of home ownership.&nbsp;</p><h2 id="">What to avoid when it comes to affordability</h2><h3 id="">1. Making too small of a down payment</h3><p id="">It’s possible to get your first home for as little as 5% down. However many first-time home buyers can get&nbsp; caught up in borrowing potential, higher interest rates, and try to purchase something they ultimately can’t afford in the long run. Many people think the <a href="https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html#toc0" id="">minimum downpayment</a> in Canada needs to be 20%, but this isn’t true (unless you’re buying a home that costs $1 million or more). A larger down payment does allow you to have smaller monthly payments, get a better mortgage rate and gain more equity, but if you can’t afford it, anywhere between 10% to 20% is a good range to start. The most important part of a down payment is finding an amount that leaves you with a monthly payment you’re comfortable making for a long period of time.&nbsp;</p><p id="">But, don’t forget that if you’re making less than 20% off a down payment, you are required to also purchase <a href="https://www.cmhc-schl.gc.ca/en/consumers/home-buying/mortgage-loan-insurance-for-consumers/what-is-mortgage-loan-insurance" id="">mortgage loan insurance</a>.</p><h3 id="">2. Not getting pre-approved for a mortgage early on</h3><p id="">Getting pre-approved for a mortgage is as simple as filling out a <a href="https://apply.pine.ca/start?gaconnectorId=9caa7d5d-0d6b-3efc-fd61-b41459ae9b10" id="">quick and easy online application</a>. Many potential homebuyers like to scope out the market first before applying for pre-approval. Though this may seem like a logical first step, there’s nothing worse than finding your dream home and realizing you won’t have the financing for it. Your pre-approval will also help you with budgeting to better understand what you can afford during your search.&nbsp;</p><h3 id="">3. Not finding the best rate for you</h3><p id="">When it comes to finding the mortgage that’s right for you, it’s not just about finding the best rate: it’s about finding the best lender, too. When you start your home buying journey, it’s important to find a lender that works with your terms. Not only will they have your best interests in mind, they’ll work with you to find the best rates, amortization payment period, payment structure, all while hoping to work around your schedule or even giving you the <a href="https://apply.pine.ca">option to do it all online</a>.&nbsp;</p><h3 id="">4. Looking into first-time home buyer programs</h3><p id="">First-time home buyers don’t always realize how many <a href="https://www.pine.ca/blog/your-guide-to-first-time-home-buyer-incentives-in-canada" id="">incentive programs </a>exist that give them deductions towards their first home purchase. In Canada, there are a few different programs that exist in order to optimize your savings and increase your home equity:</p><ul id=""><li id=""><strong id="">Canadian Home Buyers Plan (FTB): </strong>This <a href="https://www.nerdwallet.com/ca/mortgages/what-is-the-home-buyers-plan" id="">program</a> allows you to borrow up to $35,000 from your Registered retirement savings to use towards a down payment&nbsp;</li><li id=""><strong id="">CMHC First-time home buyers incentive program (FTHBI): </strong>This program lets you borrow between 5% to 10% from the CMHC to put towards your down payment.&nbsp;</li><li id=""><strong id="">First-time home buyers tax credit: </strong>This tax-credit on your first-home purchase from the Canadian government helps to offset the high costs that come with closing. You could receive a non-refundable income tax credit of $10,000 which results in about $1,500 of federal tax relief.&nbsp;</li><li id=""><strong id="">Land Transfer Tax Refunds: </strong>Some provinces like Ontario offer first-time home buyers an incentive to reduce closing costs, specifically land transfer tax. As a first-time buyer, you could get a refund of up to $4,000. Plus, certain municipalities like Toronto offer an additional rebate of their Municipal Land Transfer Tax, which maxes out at $4,475.<br></li></ul><h3 id="">5. Emptying your savings account</h3><p id="">Buying your first home will inevitably be one of the most expensive purchases you make. But this doesn’t mean you should put every last penny into your home. Draining all your savings for a down payment could put you in a difficult position for any future financial emergencies, including medical emergencies or suddenly losing your job. Taking time to save beyond the bare minimum and creating an emergency cushion will have your mind and finances at ease in case of any unexpected situations.&nbsp;</p><h3 id="">6. Being oblivious to closing costs</h3><p id="">The costs of purchasing a home is more than just your down payment and mortgage payments. Many buyers neglect to set aside money for the <a href="https://www.pine.ca/blog/your-complete-guide-to-closing-costs-in-canada" id="">closing costs of the home</a> which can range from <a href="https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html" id="">1.5% to 4%</a> of the purchase price of your home. Here are some of the costs you need to account for:&nbsp;</p><ul id=""><li id=""><strong id="">Land Transfer Tax:</strong> A mandatory tax on the purchase of a home that varies by province and city&nbsp;</li><li id=""><strong id="">Utility &amp; Property Tax: </strong>Your hydro bills or maintenance fees that will occur monthly in addition to the <a href="https://www.ontario.ca/page/property-tax-0" id="">levied annual tax</a> by the government on your property</li><li id=""><strong id="">Home Insurance: </strong>A mandatory insurance purchase to protect your home in case of major damages&nbsp;</li><li id=""><strong id="">Legal Fees: </strong>Notary fees charged by a lawyer to prepare and supervise the signature on important documents as well as title search and registration</li></ul><h2 id="">What to avoid when it comes to the home you want to buy</h2><h3 id="">7. Brushing off the importance of neighbourhood research</h3><p id="">One of the biggest mistakes you can make on your first home purchase is seeing only within the boundaries of your house’s four walls. Your house or condo will become your home and there are several factors that can make or break it having that “home sweet home” feeling, including the neighbourhood. During the pandemic, an influx of Canadians <a href="https://www.moneysense.ca/spend/real-estate/moving-out-of-toronto/" id="">moved out of big cities like Toronto</a>. But what many didn’t factor in was the effects of their new neighbourhoods and how it shifted their lifestyles. From local restaurants and coffee shops, schools in the area, there’s an important list of things to evaluate in your potential new neighbourhood that will help you choose the right space for you.&nbsp;</p><h3 id="">8. Looking outside your price range</h3><p id="">Aiming high is an admirable quality except for when it’s paying for something out of your price range. Not taking the time to sit down and calculate what you really can afford can end up costing you a lot of time in your search, including looking at homes out of your qualifying range. You can use a<a href="https://www.ratehub.ca/mortgage-payment-calculator" id=""> mortgage calculator</a> to help you determine what’s within your reach. Remember, your goal is to have achievable monthly payments that you can sustain for a long period, not something you’ll be paying off your whole life.&nbsp;</p><h3 id="">9. Forgoing a home inspection, if you’re buying a house</h3><p id="">Many homebuyers often skip out on a <a href="https://www.nerdwallet.com/ca/mortgages/what-is-home-inspection-canada" id="">home inspection</a> and pay the costs down the line for repairs and maintenance. The inspection process involves a professional examining your home for any structural, internal or cosmetic damages and usually can take up to three hours depending on the size of your home. It may seem like an additional cost in the process, but getting a professional to assess that your house is structurally sound, with all major systems working, is a well-worth investment to avoid costly future problems.&nbsp;</p><h3 id="">10. Making an emotional decision</h3><p id="">More often than not, most people might tell you not to make huge decision while emotionally charged. It’s kind of the same way when it comes to buying a home. There can be so much excitement when walking into showings, imagining your future, and how your life will fit perfectly into the space. But don’t base a multi-year commitment of a mortgage on the euphoria of your emotions vs. the actual logistics. Yes, it’s important to find a home that you can imagine yourself happy in–this is the biggest purchase of your life, after all–but take the time to make a pros vs. cons list and evaluate the important needs of the home vs. your actual wants, to understand where you can compromise and what makes the most sense.&nbsp;</p><h2 id="">The process is a marathon, not a sprint.</h2><p id="">Rushing into a home purchase is something that many first-time buyers might regret. That’s why it’s important to evaluate your finances, decide what you can afford and make informed decisions when pulling the trigger on your purchase. While an expensive jacket is something that can be returned, purchasing a home doesn’t come with a similar return policy. When you’re ready, don’t forget one of the most important steps in the home-buying process: getting pre-approved for your mortgage.&nbsp;</p><p id="">One of<a href="https://apply.pine.ca/start"> Pine’s mortgage advisors would be happy to speak with you</a> to help you kick-off your home ownership journey.&nbsp;</p>

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