Getting a Mortgage When Relocating / Moving to a New City
September 25, 2018 | Posted by: Ron Chan
Stats Canada’s recent economic indicators prove a Winnipeg population growth that is greater than the country’s average. That means if you are moving/relocating from somewhere in Canada, there’s good chance that you’re coming here to the center of it all. You couldn’t be making a better choice, as the developments in our fine city are a shining beacon of even greater things to come. Among these developments, are residential opportunities that remain very affordable. Coming out of the summer of 2018, the average price of a house is under $300,000, even those found in the city's trendier communities.
So here you are on the verge of a wise move to Winnipeg, and you’re wondering if you can capitalize on the current real estate investment opportunities. After all, how will lenders look at you as someone who is just arriving in town for the first time? Are you a flight risk? Will you have stable income? All of these questions and more can make you hesitate when you’re just a click away from mortgage pre-approval.
Instead of procrastinating further, let’s take a look at what you need to know when getting a mortgage when moving to a new city.
3 Things You Need to Consider Before Seeking a Mortgage When Relocating to Winnipeg
Are You Porting an Existing Mortgage?
Mortgage portability is a concept relevant to those of you who are currently in a mortgage, and want to carry that mortgage into a new home in a new city. Essentially, you are moving it with you when you sell your home and move to a new one under an agreement that signs the mortgage over to a new property.
You might choose to do this in order to take advantage of a preferable interest rate, one that you want to keep for the duration of its term. By porting your mortgage, you prevent interest rate increases. It’s as if you remained in your current home in your current postal code.
Another reason for porting the mortgage, is to avoid avoid technically breaking your existing mortgage. Unless your move coincides with the conclusion of your current mortgage, you are indeed breaking a contract, even if reasonably so. That means you will likely have to pay a penalty. Plus, it doesn’t look great on your mortgage history - something that lenders consider when the time comes to buy a second home or investment property.
Of course, all of this will be a moot point if your don’t have a portability clause in your mortgage. For instance, in most cases, a variable rate mortgage does not carry the portability feature. In such a scenario, you will want to find a broker (in your new city) than can find you a lender that will be willing to convert your mortgage to a fixed rate and port accordingly.
Even with mortgage portability, you can’t just close the door on your old home and enter into the same rate on a bigger more expensive home. Lenders will still look closely at your income, the overall amount of debt you’re carrying, and all other considerations that lenders look at.
As you can see, there is a LOT to factor into the equation when you plan on porting your mortgage when relocating to a new city. You will need to consult with a mortgage broker in Winnipeg before (or soon after) the move.
Does Moving to a New City Mean a New Career?
If you’re moving to a new city then you’re moving into a new job, in some form. However, there is a big difference between a new job with a new company or a lateral/vertical move at an office in a new locale. Most lenders will certainly look at the latter as a sign of income stability.
That being said, there is more to consider. Even if starting a new career with a new company, a great credit score will go a long way to making you attractive to lenders. The type of job also makes a big difference, as does your history (or lack thereof) of job hopping, along with income prospects that come from your education and/or profession of choice. View more on getting a mortgage when starting a new job, as the points there are just as relevant to this topic.
Lastly, if you are moving in order to find a new vocation (a common reason for relocating), secure one and establish a steady pattern of income before you approach lenders for a mortgage. This may mean waiting for a year or two longer than you prefer, but it will make you a more appealing candidate for that home loan. Again, credit history and current savings will help buffer any trepidation banks may feel.
Reach Out To a Local Broker
We concluded item #1 above with this statement, but it deserves it’s own category. A local mortgage broker will roll out the proverbial welcome mat so that you can literally do the same on the front steps of your new home soon after you relocate to the city. A broker will assess your background as a home loan candidate and find local lenders that can accommodate your unique needs while securing a rate you can work with.
But not just any broker will do. You need one with vast experience in the aforementioned concept of mortgage portability, and one that has worked with those who are not just new to Winnipeg, but new to Canada. In securing mortgages for those new to Canada, a broker will have cut through all of the red tape that can leave an individual or household stuck in limbo, and can do the same for you.
Whether you are planning your move to Winnipeg today, or have already arrived, if you are looking to enter into a new mortgage, contact Ron Chan at 1-204-290-9950 today.