Jun 17, 2020
If I apply for CERB will it impact my mortgage approval?: Ask BNN Bloomberg
With growing economic uncertainty during the COVID-19 pandemic, the financial landscape is shifting every day.
Whether it's dealing with sudden unemployment, ballooning debt, or expenses related to working from home, BNN Bloomberg wants to help Canadians navigate these uncharted waters.
That’s why we created Ask BNN Bloomberg, where you can have your personal finance questions answered by industry professionals.
Email or send your questions via video to firstname.lastname@example.org, and we will aim to answer them weekly.
Questions and answers have been edited for clarity. Last names will not be used.
Can I receive CERB if I receive CEWS?
Jeff in Halifax N.S.:
I'm receiving the Canada Emergency Response Benefit (CERB) and I've been offered a temporary job at $1,000 per month which will be paid through the employer's Canada Emergency Wage Subsidy (CEWS) program. Will this affect my CERB income? (June 6, 2020)
Melissa Leong, financial speaker and author of Happy Go Money:
What happens if you’re receiving the Canada Emergency Response Benefit and you take a temporary job that pays $1,000 a month, supported by the Canada Emergency Wage Subsidy?
So with the CEWS, the government’s intention is to move as many Canadians as possible off the CERB so they’ve been on the record saying you can’t benefit from both programs. There’s a but here, but I’m going to come back to it.
Generally if an employer hires or rehires you through the CEWS this will impact your eligibility for CERB. You may have to stop applying for the CERB payments and in some circumstances you may also have to pay back the benefits you have already received.
But if you do return to work and your earnings fall under $1,000 a month, you can still be eligible for the CERB, provided you meet all the other requirements. So CERB, CEWS, there is a way to benefit from both. (June 10, 2020)
Impact of CERB on mortgage rates
Nina in Grimsby, ON:
I put a down payment on a condo four years ago and I was pre-approved for a mortgage. Of course, the pre-approval expired, but I'll finally be moving in this summer.
If I go on CERB, will it affect my chances of getting a good rate for my mortgage -or at the very least, getting approved at all? (June 4, 2020)
Rob McLister, founder of RateSpy.com:
First, a general comment. With a 20 per cent down payment on a new-build urban condo, there are almost always lender options. It's usually just a question of what rate and terms you'll get.
Worst case, if you're confident you'll get your job back, there is private financing via mortgage brokers to bridge you through unemployment. The cost is much higher but you can choose a short and/or open mortgage term. At least then you'll likely be able to close and not lose your deposit.
To get the best rate and terms possible, a borrower must be currently employed. If you've lost income due to COVID-19 and are relying on CERB, mainstream lenders will not approve you for a new mortgage. Assuming your credit and debt ratios meet prime lender guidelines, you'll have lots more options once your employment becomes stable and "permanent" again. (June 10, 2020)
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Employees refusing to return to normal hours
Sarah in Vancouver:
Hello, I have some questions regarding the Canada Emergency Response Benefit (CERB) and part-time employees.
Just to give you some background, I am a cosmetics manager at a Shoppers Drug Mart in B.C., and due to COVID-19 I had reduced the hours for my part-time employees.
I have an employee who, prior to the pandemic, would work 24 to 30 hours per week. Over the past couple of months, her schedule was reduced to around eight to 16 hours per week so she was eligible to receive assistance.
She was offered more shifts but declined so she could continue collecting CERB. I can understand her position, however, as we begin to get back to normal operating store hours I will require more availability.
My question is, with a gradual return to normal, how are employees expected to navigate this situation? This employee may be needed for 12 to 21 hours per week for the next couple of months but not back to pre-COVID scheduling.
The CERB "could" provide the employee with more income if she chooses not to work more than eight to 16 hours. However, if she refuses to work the hours that I require to run my business I will need to hire someone who will take those shifts. It’s a tough situation for both sides, as I understand that the employee needs income but the business requires staffing.
Thank you in advance for your time and consideration. (June 5, 2020)
Jessica Moorhouse, financial counsellor and personal finance blogger for JessicaMoorhouse.com:
I've been seeing a lot of questions about this, especially from employees who have had their hours reduced and are hesitant to accept more hours again because they'd like to keep collecting CERB.
Although I'm not an employment lawyer, based on my interpretation of the government's criteria for CERB eligibility, the only way someone can refuse work and still be eligible for CERB is if they work for an essential service and believe there are some real safety concerns putting their life and health at risk.
That being said, if the employee in question is working eight to 16 hours per week, then it's unlikely this is the case (since they'd simply refuse to come to work entirely). Therefore, refusing hours, especially the regular hours for which they were hired, may be deemed a resignation through the eyes of the employer. And since the employee would become ineligible for CERB if they voluntarily quit, they would be doing themselves a big disservice.
Moreover, the employee is only eligible to receive four CERB payments in total. Once those payments run out, they can no longer apply for future CERB payments. And if you, the manager, are forced to hire another employee to make up those hours they refused to take on, once they run out of CERB payments and want more hours, you may not have any more to give.
In my mind, they're just looking at the short-term CERB payouts, not the long-term consequences this may have on their future as an employee. (June 8, 2020)
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