Getting a Mortgage When Working from Home
April 5, 2021 | Posted by: Ron Chan
With workplace practices changing significantly after the events of 2020-21 many people are working from home on a full time basis. Companies have found that with the right technology productivity nor efficiency needs to suffer. This is considered a great benefit for many professionals, however some of you are concerned about implications (if any) that may apply to getting a mortgage. Here’s what you need to know.
What You Need to Know About Getting a Mortgage When Working from Home Full-Time
Are You a Self-employed Contractor?
There is a difference between someone who works full-time for a company with a salary, benefits, and income deductions being managed by ones’ employer. If instead you have been a self-employed freelancer or contractor for a year or longer then you land in a different classification. But fret not, getting a mortgage does not need to be complicated. If this is you, please refer to our guide to getting a mortgage when self-employed in Winnipeg. For the rest of you, keep reading.
Proof of Employment and Income
Ultimately, there is no difference in home loan eligibility for those who work in-office and those who work from home, when employed by a company. As long as you have proof of income, good credit with limited financial liabilities, and enough for a downpayment you’re pretty much a shoe-in.
That said, there are some scenarios where a lender may look a little closer at your situation. For example, if you currently live or are looking to buy a property far outside of the place of work some lenders may be more demanding and require a comprehensive letter of employment. A two-hour commute is one thing, but if you live or are buying in a whole other city, province, or country than your employer’s headquarters, an organizational figurehead (owner, director, HR manager, etc.) may need to go into greater detail about your tenure and position.
Financial Benefits of Working from Home and Getting a Mortgage
If you just started working from home in 2020-21 you will need to look at your income in a different way. While you may not be self-employed and enjoy the same tax benefits as a contractor does, you can ask your employer to issue a T2200 Declaration of Conditions of Employment. Since your employer is not legally required to compensate you for utilities, office furniture, and other expenses associated with working remotely, you can write off a number of expenses even as a full-time employee. The Declaration of Conditions of Employment form itself will provide guidance on claiming other expenses incurred as a remote worker. What this does, is improve your income status and this may help you qualify for more on a home loan. Better yet, you will be able to write-off an equal portion of your mortgage payments once you have purchased the home. It’s a win-win!
For greater clarity on the above, and to get help with securing more favorable rates and terms on your mortgage, contact a professional broker in your area. If you live Winnipeg, that mortgage specialist is Ron Chan of INVIS Canada. Call 204.290.9950 to begin with a friendly conversation.