Proof of Income for a Mortgage Today?
A number of Canadian mortgage lenders are now asking for proof that their clients are earning enough money to pay off their mortgages. Many of the lenders have had requests from people trying to borrow more than 80 per cent of the value of their homes. But they are unable to do so because income documentation has not provided Proof of Income Mortgage.
This trend started about a year ago, when it became apparent. Which that borrowers were having trouble repaying their home loans – particularly those with adjustable rates. However, lenders have found that many people are now unable to repay even fixed-rate mortgages. Lenders are now starting to turn away borrowers. Because they do not want to be stuck with mortgages that could go into default.
If lenders require income documentation then it is also likely that they will start verifying employment and other information on the loan application. This means that if someone’s stated income does not match up with what an employer says, the mortgage application could be rejected.
It is becoming more common for lenders to ask their customers to provide proof of income. When they apply for a home loan. Particularly if the borrower wants a large amount of money to make a purchase. There are other signs that people will be asked to prove their earnings as well. Such as applying before interest rates rise.
Of course, lenders will generally ask for proof of income. Because it helps protect both the customer and the lender in case something goes wrong. Lenders do not want to issue a mortgage that they know the borrower cannot afford. Because it will leave them stuck with a home that no one can pay for and creates an untenable situation if they have to foreclose on the property.