# Mortgage qualification



## condor (Jun 15, 2014)

I was employed when i bought my present house 3 years ago. My renewal is now coming up shortly and a bit concerned on the institutions will view my source of income.
Rather than accept and sign the renewal form...it would be nice to have the lattitude to look elsewhere.....which brings back to my question. Can i still qualify using my Canada Pension benfits for myself and wife to meet the guidelines.

My wife and myself have a combined Canada Pension plan income of 38000 dollars....utilities 120 month with the house taxes being deffered under the Alberta Seniors plan.....amount of present mortgage is 269000 dollars...with Zero debt.

Can anybody out there advise me of any potential problems or issues going forward...thanks


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## Just a Guy (Mar 27, 2012)

When you come up for renewal, the bank doesn't require you to requalify. You can also renegotiate a better rate than what they send you in the mail without requalifing, just go into a branch and ask for a better rate.

If you go to a mortgage broker, you'll need to requalify and then your income will come into the equation. BTW, having zero debt isn't always good. For some reason banks don't like high net worth, low debt people.


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## sags (May 15, 2010)

According to realtor.ca mortgage affordability calculator, a $38,000 income won't qualify for a $269,000 mortgage.

I would renew with the bank. The less questions asked...........the better.

Issues going forward.........any credit application could update your credit report to "retired" and may cause questions from lenders.

Banks have not taken into account the difference between employed and retired as it pertains to "after tax" income.

They fail to recognize that retired people can earn far less gross income and have a higher net income than working folks.

No CPP contributions, no EI contributions, no union or professional dues, pension contributions and pension credits, age credits. ..........etc.

Plus all the other.......no daycare or kid expenses, cheaper car insurance, lower groceries, lower clothing costs etc.etc.

We have 70% of our working income but have a lot more net income than when we were working.

The bank calculations don't take any of that into consideration for loan qualifications.

In fact, they view pension and government income as higher risk because it is creditor proof.


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## dougbos (Jun 4, 2012)

sags said:


> According to realtor.ca mortgage affordability calculator, a $38,000 income won't qualify for a $269,000 mortgage.
> 
> I would renew with the bank. The less questions asked...........the better.
> 
> ...


Actually pensions and CPP are looked on favorably as they are continuous income and there is no worry about job loss etc.


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## Mortgage u/w (Feb 6, 2014)

So I always ask this question: why do you want to change lender?

If you change, you will have to re-qualify - just like you did when you first got your mortgage. If you stay, its a simply renewal and no one asks questions. Could you qualify? Of course.

Contrary to 'sags' comments, banks do not fail to recognize the difference between retired income and employment income. There is a difference between "after tax" income and "taxable" income. Both are taxable therefore the reasoning that banks "_fail to recognize that retired people can earn far less gross income and have a higher net income than working folks_" is false. A retiree may look like they receive untaxed income but at the end of the year, they still pay their fair share of taxes. The taxes will be lower than the working citizens but so is their income. Risk is risk.


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## sags (May 15, 2010)

A retiree can earn less than a worker and have more "after tax" income simply from the pension and age tax credits of $9125.

For a retired couple versus a working couple, the age and pension credits add up to $18,250 more un-taxed income.

Age credit = $7125 + $2000 pension credit = $9125 times 2 = $18,250 more un-taxed income for a couple.

From what I am aware of the banks consider 35% gross income in their qualifying criteria, which doesn't reflect that reality.


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## eligoldman (Apr 24, 2017)

Nice informative discussion..


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## mark0f0 (Oct 1, 2016)

There's no downside to shopping around trying to find a better deal. However, there just might not be a better deal forthcoming which is something you need to be prepared to live with. With that kind of debt relative to income, and the ability to likely sell at this point and realize some decent amount of positive equity, it might not be a bad idea to consider all of your options before market prices decline significantly further and financing tightens up.


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