When it comes to applying for a mortgage, this is the second question I hear the most often, after ‘what is your best rate?’ As not every mortgage is alike, neither are all the requirements. Having said that, there are some documents that every mortgage approval requires and below is a list of the most commonly requested ones.
- Credit report
Usually 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 directly 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 history such as 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, such as car insurance or a cell phone bill.
- 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 property in order to buy the other party out, in the case of a relationship breakdown. Ensure the offer to purchase documents are clear and easy to read 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 for clarity. Some lenders also request confirmation you have removed all 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 can provide the property details.
- 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. Do ensure you can also provide details and history of any large deposits made into that account during that period. Most 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 for those 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. There are other eligible sources for downpayment and I encourage you to speak with your mortgage professional about the specific document requirements you will be required to provide based on where the funds are coming from.
- 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 you also may 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. Do keep in mind that the programs available for self-employed individuals vary with the different lenders and if one lender declines you, another one who has different rules may very well approve you. Also be advised, a good majority of the programs for the self-employed request you to confirm you have no personal income tax owing to Canada Revenue Agency for the previous tax year.
- Proof of Identification
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 document is current and accurate. While this is not always mandatory at time of approval, you will be asked to provide proof of identity at the lawyer’s office. Lenders have different forms of acceptable Identification, so find out from them what is allowable and what they won’t accept.
- 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 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 through a different lender.
- Lawyer contact info
If your mortgage 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. Depending on your product type, you could be eligible to use a closing service in lieu of a lawyer at a reduced cost.
- Existing property information
If you are on the title of any other property or properties of any sort, you will likely have to provide documentation to confirm the monthly costs related to the property (s). As you own it, or even a part of it, you are ultimately responsible for 100% of its costs. These costs include the mortgage payment, property taxes and condo fees if applicable. If it’s a rental property, you could be asked for a copy of the lease agreement or your recent T1 general if you own multiple revenue properties. The lender needs to ensure you can qualify to support the new financing you’ve applied for as well as the costs of 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. 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, or an acceptable alternative that works for all parties.