When it comes time to sit down with your lender at the bank or another financial institution, you're going to be asked to provide a substantial number of documents. In order to make the process as smooth and problem-free as possible, we have assembled this handy checklist.
Note: Every situation is different, so you may not need to provide some of the documents listed below or be asked to supply additional documents not included in this article. To obtain the best results possible, always be as cooperative and helpful as you can when meeting with your mortgage loan officer.
The Property
For the home or property that you wish to purchase, be sure to provide:
- A copy of the signed Offer to Purchase (sales contract).
- Documentation for the deposit you've placed on the property.
- A copy of the Listing Sheet (sometimes called the "feature sheet") as well as a legal description of the property, if available.
- For condominium properties, bring a copy of the condominium declaration, bylaws, and the most recent available budget.
Notes:
- You and/or the seller can use pre-made standard Offer to Purchase forms or you can draw up your own. As long as the basic legal elements are there, the Offer to Purchase should be accepted by the mortgage lender.
- The Offer to Purchase should include both inclusions (like appliances and window coverings included with the sale) as well as exclusions (anything the property owner will remove before the sale is final). Generally speaking, anything permanent or fixed (such as light fixtures) is presumed to be included in the sale of the property.
- The Offer to Purchase must include the sales price as well as the method by which you will pay for the property (bank mortgage, seller's mortgage, etc.)
- The Offer to Purchase must also include the date of closing.
Your Income
Your lender will need documentation that shows your income. Generally speaking, most banks and financial institutions want at least two years of your income history, including self-employed and freelance earnings.
Note: All income documentation must be verified by a financial statement prepared by an accredited accountant. T1 Generals and NOA's should always be used to verify the income listed on your financial statements.
Commission Income
For most mortgages, the bank or lending institution will need to verify commissions regardless of the loan-to-value (LTV) amount of the mortgage compared to the market value of the property. Most banks require an average of two years' documentation for commission income.
Be sure to include:
- A letter from your employer that details the terms and amount of the commission as well as how long you have been employed there.
- A pay stub showing your year-to-date income.
- Two years' worth of T4 (pay slips) documents.
- Small Businesses/Partnerships
If you're the owner, co-owner, sole proprietor, or hold a controlling interest in a business, you'll need to provide documentation for this. Generally, the bank will look for two years' worth of T1 General Income Tax forms, including all schedules, as well as your Notices of Assessments (NOA's) for the past two years.
Insured Mortgages
If you're obtaining an insured mortgage, you'll most likely need to provide the following:
- Two years' worth of NOA's (Notices of Assessment).
- Financial statements (prepared by a professional, accredited accountant).
- All audited financial statements (where applicable).
- T1 General Income Tax forms.
Note: The above applies for both commission as well as self-employed income.
Salary Information
If you're a salaried employee, you'll need to provide the following documentation:
- A pay stub that's less than a month old. The pay stub must show your rate of pay, the pay period, taxes deducted, benefits deducted, net income, and gross income.
- A letter from your employer. This must be written on your company letterhead and include: the physical address of the business, contact phone number, contact email information, and fax number (where available). The letter must be dated 30 days or less prior to your meeting with the bank and signed by a company officer. Where applicable, the letter should include information about car allowances, travel allowances, overtime, bonuses, and pending increases to your salary (see below).
Note: If you're a salaried employee but also have additional income (beyond your standard salary), you'll need to provide additional documentation.
- Overtime - If you have a record of overtime worked as well as proof of future opportunities to work overtime, you'll need to provide documentation for this. Generally speaking, it's recommended to document the past two years of your overtime track record.
- Car Allowance - This doesn't include when you regularly use a car as part of your job, only when it's an occasional benefit. If you do require a car to perform your job, you cannot claim the car allowance towards servicing the mortgage.
- Bonuses - If you can show a proven two-year track record of receiving bonuses, this can go towards qualifying your income.
Hourly Employee Information
If you're working a job for which you're paid hourly, you'll need to provide the following documentation:
- A recent pay stub (less than 30 days old).
- Last year's Notice of Assessment (NOA).
- A letter from your employer. This must be written on your company letterhead, include the physical address of the business, contact phone number, contact email information, and fax number (where available). The employer letter must be dated 30 days or less prior to your meeting with the bank and signed by a company officer. It should contain the average number of hours you have worked, your hourly rate, the tenure (length) of your employment, the name of your position, and your year-to-date earnings.
Other Possibilities
Depending on your situation, you may also need to provide documentation from other income sources such as rental income, pensions, disability payments, tips, seasonal jobs, child or spousal support, foster care, and/or the Universal Child Care Benefit. You'll also need to document all outside sources of wealth, including gifts (including from family members), proceeds from the sale of a property, and liquid assets such as bonds, securities, and stocks.
This is a general overview, and while many of the documentation needed is universal, exactly what's required can vary among lenders. What documents you need to provide is a question you need to ask a mortgage lender to ensure you can properly prepare for your mortgage application, making the process run smoothly.