Frontline pensions are among the better plans in the country, and they get misunderstood in both directions on a mortgage file. They do less than people hope while you are working, and more than people expect once you stop.
Contributions do not cost you borrowing room
Lenders qualify on gross income, before deductions. Your pension contribution comes out after that figure, so it does not reduce the income a lender uses. It does reduce your take-home pay, which is why the payment you qualify for and the payment that fits your month are two different numbers. Both are worth looking at.
What the plan itself is worth on a file
Stability, not income. A permanent position with a defined benefit plan reads as durable employment, and durable employment is what underwriting is actually testing for. It does not add a dollar of qualifying income while you are still working.
Retiring inside your term
This is the piece worth planning. If you retire during a term, the income on your file at the next renewal is pension income rather than employment income, and it will be a different figure. Applying while employment income is still in place is a materially different file from applying six months later. If a retirement date is coming, it is better to raise it early than to discover it at maturity.
Documenting pension income
- A pension statement or award letter showing the amount and that it is for life.
- Recent deposits into your account matching that amount.
- T4A slips once you have a full year of them.
Your next useful step
Bring the employer, agreement and recent pay. We will work from the document instead of guessing at the income.
