Moving to a new area or city can be hard enough, but once you add in possible time constraints, job pressure and family obligations, it can quickly become overwhelming. During these stressful situations, a relocation mortgage can come in handy for you and your family and ease the transition period.
A relocation mortgage is a type of special-feature mortgage designed exclusively for employees of corporations who are either transferring or relocating due to their job requirements and company incentives (such as pay raise, promotion, etc.).
It is beneficial to the borrower purchasing a home in a new area, as they generally receive financial incentives from their employer as part of the loan. If you or someone you know is interested in or considering a relocation mortgage in Mississauga, continue reading to find out what these mortgages include and how they work for long-term employees.
What is a relocation mortgage?
A relocation mortgage (or relo for short) is a type of alternative mortgage loan offered to employees looking to purchase housing in a new town or area due to a job transfer, relocation or promotion.
Relocation mortgages are meant to make employees more comfortable moving for their job and are typically offered as an incentive with the promotion or transfer. The main advantage of this type of loan is that the employer will subsidize closing expenses, low-interest rates or interest rate buydowns to make the mortgage more appealing.
Relocation mortgages can have interest rates that are approximately 25 to 50 basis points below typical interest rates. In turn, this allows the employee to own property while having lower mortgage payments each month and less susceptibility to volatile or fluctuating markets in terms of interest rates and refinances. Furthermore, the employee can have more peace of mind when relocating for their job. The financial burden of buying a home and making mortgage payments is lessened with a relocation mortgage.
Why do employers offer relocation mortgages?
Employers offer relocation mortgages to help offset the burden of relocating or transferring an employee. Studies show that employees who are relocated for their work are likely to have to do this multiple times throughout the years.
Employers are more likely to offer incentives such as relocation mortgages to those employees who they believe will be relocated for a longer-term (at least a year or longer). That saves the company and employee from getting too settled in one spot and buying a house when another move is imminent.
Relocation mortgages help employees with their move and can reflect well on employers who offer this incentive. An additional service that the lender can offer is a team of home loan consultants who can address these employees’ specific needs and facilitate buying a home. This makes for a more convenient and simplified process for the employee.
How to Qualify for a Relocation Mortgage
The requirements for a relocation mortgage are the same as any traditional mortgage. The first and foremost step is to ensure that you have a steady income and job stability to comfortably make your mortgage payments. You will also need to prove this to your mortgage lender, so prepare pay stubs and a job letter.
Lenders do not typically give mortgages to those who are new in their job or still on probation. Ensure you are financially secure and even if you switch jobs, try to stay in the same field as lenders value consistency and stability. Ensure that you have extra funds saved for a sufficient down payment and help with any closing or unexpected costs down the road.
Use an Experienced Real Estate Agent
Another critical step in securing a new home is to talk with an experienced real estate agent who knows the area you are relocating to. While you may not be familiar with the housing market in another city, it’s important to confide in someone who is, and it may even help if you have friends or family in the neighbourhood who can give advice. Use a realtor and talk to people in the community and get an idea of what you are looking for, compare prices, and what to expect in the area you’re moving to.
If you have been faced with a job opportunity in a new city or have to transfer to another location for your job, remember that you have options, and a relocation mortgage is there to help you find relief.
For more information on relocation mortgages in Mississauga, call sMp Mortgages at 1-855-915-5139 or contact us here.