Mortgage documents required for financing approval
What is required to get a mortgage approval is more extensive than it was five years ago. Not every mortgage is alike and neither are the document requirements. There are some documents that every mortgage approval requires, below is a list of the most commonly requested ones.
- Drivers license or Passport
This document is required to verify your identity and also to ensure the correct spelling of your full legal name. It is important the information on the driver’s license is current and accurate.
- Social Insurance number
All income tax paying Canadians have this 9-digit number also known as your SIN. Providing it when a lender is ordering your credit report ensures the report generated is for you and not for someone with the same or similar name and birthdate as you. If you are in Canada on a work permit or have landed immigrant status, you would have a SIN number starting with a 9 and it is important for the lender to immediately be informed of this. Given the lenders all seem to have different rules and guidelines under their New to Canada programs you want to know right away if you need to apply for a mortgage with a different lender.
- Purchase contract
This document is usually only required by the lender when purchasing a property or under a special program when one person refinances a jointly owned home in order to buy the other party out in the case of a relationship breakdown. Ensure the offer to purchase documents are clear as your lender will require a legible copy for their file and often after faxing back and forth for changes and initials they are difficult to read. In this case, I may suggest also providing one of the earlier versions of the offer to the lender at the same time. Some lenders also request confirmation you have removed any conditions that were included in the contract such as a financing waiver or inspection waiver. The lender will also require the MLS listing sheet for the subject property you are purchasing, however, if not available, you will be asked to provide the property details.
- Land title
If you are refinancing your property a current land title will likely be requested during the mortgage application process. Do have your property legal description on hand as it is usually the lender or mortgage broker who will order the title search. This information can be found on a recent property tax assessment or tax bill. In the case of a property purchase, it is the lawyer who would be conducting the title search.
- Downpayment confirmation
This documentation requirement varies depending on the source of your downpayment funds. For money you have saved over a period of time, the most recent 90-day transaction history is usually required. This is a requirement by all lenders in order to comply with the Canadian Money Laundering Act. Do ensure you can also provide details and history of any large deposits into that account over the last 90 days. The lenders will not accept documents where anything is “blacked out” and you must also ensure you confirm ownership of the accounts by providing BOTH the account numbers and names on the accounts. For gifted funds, expect to provide a gift letter from an immediate family member as well as proof the funds have been deposited to your bank account. If your funds are borrowed, you’ll be asked for paperwork to confirm the available limit and payment details.
- Lawyer contact info
If the lender requires a lawyer to close your mortgage transaction, you will need to provide the contact details of whom you want to work with. Contact information includes law firm, phone number, fax number, office address and email address, if possible. Your realtor, lender or mortgage broker can refer you to a lawyer they know and have worked with if you don’t already have a real estate lawyer. Some mortgage transactions such as refinances can be completed without using a lawyer, instead it will be facilitated by a title closing company.
- Credit report
Normally, the mortgage professional you’re working with will order your credit report and submit it to the lender with your mortgage application. It is rare for a lender to accept a credit report provided by the borrower that they ordered themselves. If you have a limited credit history, your lender may allow you to provide an alternative credit source and some acceptable examples may be a letter from your landlord confirming no missed rent payments or confirmation of some other form of monthly payment that you’ve been making for 12 months or more.
- Income confirmation
The exact requirements depend on how you are employed; however, you can expect to be asked for some sort of documentation to verify you can make your mortgage payments. Requested documents differ for borrowers that are employed versus self-employed. For employed borrowers, you will be asked to provide a job letter and recent paystub and if you earn overtime or bonuses, you will be asked for at least 2 years Notice of Assessments or T4’s.
For self-employed borrowers, the document requirements vary depending on the lender you are working with as well as the program you are being approved under. I suggest speaking with a mortgage professional about what your specific financial situation and requirements are and do keep in mind the programs available for self-employed individuals vary with the different lenders. If one lender declines you, you may very well be approved by another one who has different rules and guidelines for the self employed person. Also be advised a good majority of the programs for the self-employed request you have no personal income tax owing to Canada Revenue Agency.
- Recent Condo Reserve Fund Study and Annual General Meeting Minutes
This applies only to condos in Alberta. The lender or the lawyer will most often require the recent reserve fund study as well as minutes of the most recent annual general meeting. These documents allow the lender to determine if the condo board is running the complex responsibly and effectively. If a property is being mismanaged, it can result in expensive special assessments or other costs being passed onto the borrower and owner of the unit.
- Existing property information
If you are on the title of any other property or properties of any sort, you will have to provide documentation to confirm the monthly costs related to the property. As you own it, or even a part of it you are ultimately responsible for 100% of its costs. The lender needs to ensure you can qualify to support the new financing you’ve applied for as well as the costs for any existing responsibilities you may have.
The above list consists of the most commonly requested documents I see on mortgage approvals these days. Of course, there are exceptions to the norm and if this isn’t your first mortgage, don’t be surprised if you’re getting asked for documents that you didn’t have to provide before. I can’t emphasize enough how much benefit you can get from working with an experienced mortgage professional of your choice. Not only can they guide you through the mortgage process, they can also work with you and the lender to come up with reasonable and attainable mortgage approval document requirements.