Applying for a mortgage can be a lengthy process, to say the least. This is often exacerbated when you encounter questions that seem more suited to a political survey than a financial form.
Your might wonder, for instance, why you’re being asked about potential “political targets” or “politically exposed” people in your family as you fill out your application. As a first-time homebuyer, you may be caught off guard by odd questions like these. However, these questions are often par for the course as mortgage lenders like to be as thorough as humanly possible.
From questions about the origin of your down payment to reviewing “unusual” sources of income, banks want to ensure there are no surprises before they approve your mortgage. Below, I’ll outline some often-unexpected questions you should prepare for and I’ll try to explain why they’re being asked.
POLITICAL TARGETS?
When applying for a mortgage, stumbling across a question about “political targets” or “politically exposed persons” isn’t what most homebuyers likely expect.
This question isn’t just about banking bureaucracy, though. It’s part of lenders’ Know Your Customer (KYC) policy designed to safeguard banks against money laundering, illegal activities, and other potential threats.
The national average home price moving into November was $656,625, according to a recent report from Wowa, an online review platform for real estate agents. In major cities like Toronto and Vancouver, many homes are listed for $1 million or more.
Lenders aren’t just interested in your financial ability to repay a loan. Before banks approve loans like these, they want a complete understanding of exactly who they’re lending money to.
This includes assessing potential risks associated with lending to someone who might be a political target, such as threats from terrorists and kidnappers. While it may seem like a scenario straight out of an espionage movie, it’s a real consideration in the financial world.
OTHER QUESTIONS YOU MAY ENCOUNTER
Asking about political targets certainly tops the list of seemingly odd questions prospective homebuyers may be asked. However, it’s not uncommon for lenders to question you about that and some of these other topics during your mortgage application process.
1. Employment history and stability
Lenders like to see financial stability in mortgage applicants, and your employment history is a great indicator of this. Reporting a steady job history suggests that you have a reliable income stream, which is essential to cover your monthly mortgage payments.
Before applying, make sure that your resume showcases consistent employment. Many lenders want to see that you have at least two years of consistent income.
For those with a more eclectic work history (such as subcontractors or small business owners), be prepared to explain any gaps or changes in your income history.
2. Unusual sources of income
Income diversity can be a strength, but it can also raise eyebrows.
Lenders may question income you’ve received from unconventional sources to assess its reliability. Seemingly random cheques, money wires, and cash deposits almost always raise a red flag among lenders.
Be transparent about where your money comes from and have documentation ready to prove its legitimacy.
3. Reasons for moving
Although this question might seem personal, it’s part of the lender’s overall risk assessment process. Understanding your motivation for moving helps lenders gauge the stability of your investment.
Whether it’s for a new job or more space, clear and logical reasons can reassure lenders of your commitment. For example, a borrower who recently picked up and moved across the country for a brand-new job may represent a higher risk compared to a borrower who’s been living in the same province for several years working for the same employer.
4. Credit history beyond your score
Your credit score is just the tip of the iceberg. Lenders might dive deeper into your credit history to understand your financial behaviour. Make sure your credit report is error-free and be ready to explain any anomalies or past financial hiccups.
You can get a complete credit report for free from Canada’s two major credit bureaus: Equifax and TransUnion.
5. Future financial plans
Lenders may inquire about your long-term financial goals in order to understand your overall financial health and planning. Be honest about your future plans, as this can demonstrate foresight and financial responsibility.
For instance, if you plan to quit your job and start a business in the next year, this risk could affect your ability to make mortgage payments on time.
6. Specific details on your down payment
Aside from wanting to see consistent sources of income, lenders may ask for specific details as to where your down payment money is coming from.
Be prepared to provide detailed information about how you accumulated your down payment, whether through savings, investments, or a gift, to assure lenders that you’re financially responsible and able to handle your mortgage payments moving forward.
KEEP RECORDS, REHEARSE ANSWERS
At their core, all of these questions aim to peel back the layers of prospective homebuyers’ personal and financial lives to ensure that the funds for your home aren’t entangled in potentially problematic situations. Lenders also want to make sure that borrowers will be able to make steady mortgage payments and have a very low risk of defaulting on the loan.
The best way to prepare for these questions is to keep detailed records of any and all financial transactions. When you speak with lenders, the more organized you are and the more proof you have of your ability to be financially responsible, the easier the loan application process will go.
Canada’s real estate market could be in for some major changes in 2024. Keep reading to see how the upcoming renewal of pandemic-era mortgages could rock the foundation of Canada’s housing market.
Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.
Quebec legislature member Youri Chassin has announced he’s leaving the Coalition Avenir Québec government to sit as an Independent.
He announced the decision shortly after writing an open letter criticizing Premier François Legault’s government for abandoning its principles of smaller government.
In the letter published in Le Journal de Montréal and Le Journal de Québec, Chassin accused the party of falling back on what he called the old formula of throwing money at problems instead of looking to do things differently.
Chassin says public services are more fragile than ever, despite rising spending that pushed the province to a record $11-billion deficit projected in the last budget.
He is the second CAQ member to leave the party in a little more than one week, after economy and energy minister Pierre Fitzgibbon announced Sept. 4 he would leave because he lost motivation to do his job.
Chassin says he has no intention of joining another party and will instead sit as an Independent until the end of his term.
He has represented the Saint-Jérôme riding since the CAQ rose to power in 2018, but has not served in cabinet.
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – NDP Leader Jagmeet Singh says he will not be taking advice from Pierre Poilievre after the Conservative leader challenged him to bring down government.
“I say directly to Pierre Poilievre: I’m not going to listen to you,” said Singh on Wednesday, accusing Poilievre of wanting to take away dental-care coverage from Canadians, among other things.
“I’m not going to listen to your advice. You want to destroy people’s lives, I want to build up a brighter future.”
Earlier in the day, Poilievre challenged Singh to commit to voting non-confidence in the government, saying his party will force a vote in the House of Commons “at the earliest possibly opportunity.”
“I’m asking Jagmeet Singh and the NDP to commit unequivocally before Monday’s byelections: will they vote non-confidence to bring down the costly coalition and trigger a carbon tax election, or will Jagmeet Singh sell out Canadians again?” Poilievre said.
“It’s put up or shut up time for the NDP.”
While Singh rejected the idea he would ever listen to Poilievre, he did not say how the NDP would vote on a non-confidence motion.
“I’ve said on any vote, we’re going to look at the vote and we’ll make our decision. I’m not going to say our decision ahead of time,” he said.
Singh’s top adviser said on Tuesday the NDP leader is not particularly eager to trigger an election, even as the Conservatives challenge him to do just that.
Anne McGrath, Singh’s principal secretary, says there will be more volatility in Parliament and the odds of an early election have risen.
“I don’t think he is anxious to launch one, or chomping at the bit to have one, but it can happen,” she said in an interview.
New Democrat MPs are in a second day of meetings in Montreal as they nail down a plan for how to navigate the minority Parliament this fall.
The caucus retreat comes one week after Singh announced the party has left the supply-and-confidence agreement with the governing Liberals.
It’s also taking place in the very city where New Democrats are hoping to pick up a seat on Monday, when voters go to the polls in Montreal’s LaSalle—Émard—Verdun. A second byelection is being held that day in the Winnipeg riding of Elmwood—Transcona, where the NDP is hoping to hold onto a seat the Conservatives are also vying for.
While New Democrats are seeking to distance themselves from the Liberals, they don’t appear ready to trigger a general election.
Singh signalled on Tuesday that he will have more to say Wednesday about the party’s strategy for the upcoming sitting.
He is hoping to convince Canadians that his party can defeat the federal Conservatives, who have been riding high in the polls over the last year.
Singh has attacked Poilievre as someone who would bring back Harper-style cuts to programs that Canadians rely on, including the national dental-care program that was part of the supply-and-confidence agreement.
The Canadian Press has asked Poilievre’s office whether the Conservative leader intends to keep the program in place, if he forms government after the next election.
With the return of Parliament just days away, the NDP is also keeping in mind how other parties will look to capitalize on the new makeup of the House of Commons.
The Bloc Québécois has already indicated that it’s written up a list of demands for the Liberals in exchange for support on votes.
The next federal election must take place by October 2025 at the latest.
This report by The Canadian Press was first published Sept. 11, 2024.
Montreal Mayor Valérie Plante is defending her decision to turn off comments on her social media accounts — with an announcement on social media.
She posted screenshots to X this morning of vulgar names she’s been called on the platform, and says comments on her posts for months have been dominated by insults, to the point that she decided to block them.
Montreal’s Opposition leader and the Canadian Civil Liberties Association have criticized Plante for limiting freedom of expression by restricting comments on her X and Instagram accounts.
They say elected officials who use social media should be willing to hear from constituents on those platforms.
However, Plante says some people may believe there is a fundamental right to call someone offensive names and to normalize violence online, but she disagrees.
Her statement on X is closed to comments.
This report by The Canadian Press was first published Sept. 11, 2024.
