So, you’ve decided that you are ready to pursue the goal of home ownership. You are going to need to submit a fair amount of personal information to the lending institution that you hope will facilitate your mortgage loan. There is a great deal of documentation that you will need to have on-hand. In this article, we’ll explain which documents need to be presented to obtain a mortgage loan in Canada.
Verification of Income
No bank or private mortgage lender will provide funds if they feel that the borrower cannot repay the debt. This means that you will need to have the proper documents to prove your income status with your chosen lender. Depending on the type of work you do, the necessary documents may change.
If You’re Hourly or Salaried
Most people fall into this category, as employees paid per hour or awarded a salary. Proving income in these cases is very straight-forward. Paycheck stubs or even a professional letter written by your employer to confirm your income are typically enough. If you’ve been with your current job for less than two years, however, you may be asked to provide income information from your previous job.
If You Work on Commission
You may be able to get by using a professional letter drafted by your employer to verify your income, terms of commission and the duration of your time at the job so far. Oftentimes, however, you will be asked to provide other documents, typically a Canada Revenue Agency’s Notice of Assessment or a T4.
If You’re Self-Employed
Self-employment doesn’t make it impossible to get a home mortgage loan. You may still be able to verify your income through a series of organized, professionally-drafted financial statements dating back two years, minimum. A Notice of Assessment is often sufficient, in addition to these documents.
Every lending agency has its own policies in regard to which documents are accepted. Make sure to contact your lender of choice and ask how they prefer their clients to verify their income. If you receive regular income from another source, such as a rental property or child support, you will be asked to provide documentation detailing this income as well.
You will need to provide the information tied to your bank account, including the account and routing numbers. If you have gone through the pre-approval process already, this part should be a breeze. If you were pre-approved, the lender already has this information!
In addition to the proof of down payment and your pre-approval documentation, you will be asked to provide the following items when obtaining a mortgage in Canada:
- A copy of the purchase and sale agreement
- A copy of the listing sheet
- Condominium documentation, if applicable
- The address and legal description of the property
- The contact information of the seller, real estate attorney, builder, and realtor
- Documents related to heating costs
- Property tax estimates
When you have all of this documentation readily available, it will make the approval process go by much more quickly.