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Mythbusting Mortgages 2 – 35% Down? Who Needs a Job?

Transcript of Video Blog:

Hi everybody! It’s Rowan Smith with the Mortgage Centre. We’re doing Myth busting #2 here and another one I want to address is the myth that if you have 35% down you don’t even need a job. That is patently incorrect!

There was a time when 35% down gave you a lot more leeway than it does and to a certain extent that’s come back. If you’re a self employed individual you don’t necessarily have to prove how much money your company makes but you do have to prove you have a job, that you have a capacity to make a payment. A mortgage is a 25-year, in some cases a 35-year commitment so, for you, having a four-month contract doesn’t really document that you have the capacity to pay in the long term.

Banks are interested in the long haul. Even with 35% down nowadays you would be expected to provide some form of income confirmation. That doesn’t mean that your tax return has to say a specific amount of money, it simply means you have to: A, have filed your taxes and your taxes are up to date; B, that you proved that you can in fact make these payments. Reasonable proof, not just some estimate of what your future earnings and income could be.

For a company that might mean maybe the last couple of year’s financial statements, so that they can look at your gross income and then another more important factor is: “What is your business?” If your business is something like a small-time cleaning company where you’re doing residential cleaning there’s a very good chance you’re making some cash in there and while the banks don’t recognize cash, they’re aware that this goes on in the industry.

These programs are equity programs based on the equity that someone is putting down, not based on the documented income. So, with 35% down you still do need a job or at least — at the very least — you have to have a way to make those payments.

For the Mortgage Centre, I’m Rowan Smith.

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