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Mortgage Documents Checklist in Canada
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Are you buying your first home? Congratulations! It is a big step and one that is full of excitement and challenges. One important thing to do when preparing to buy a home is to find out what mortgage documents you need to gather. Read on to learn more about the mortgage documents checklist in Canada.
Documents Related to Employment and Income
You’ll need money coming in on a regular basis to be able to make your mortgage payments each month. Your income must be sufficient to meet not only each mortgage payment but also any other debts you may have.
Your lender will want to know specifics about your income and employment situation to ensure that you have enough money and are in a stable enough position to make mortgage payments for the duration of the loan.
Here are some examples of documentation that may be required in this category:
- Pay stubs: Your most recent pay stubs will show you how much money you make on a consistent basis.
- T1 tax forms: Your tax returns will show you how much money you made the previous year, which will assist you to establish your creditworthiness.
- Notice of Assessment: Employed people receive a notice of assessment from the Canada Revenue Agency (CRA) every year after they file their tax returns. It will detail any overdue taxes, which will aid the lender in calculating your total debt-to-income ratio.
- Letter of employment from your employer: Your lender will want to know what your work title and status are to ensure that your position is steady and unlikely to be lowered in the future.
- 3 years of personal tax returns: If you’re self-employed, you’ll need three years’ worth of personal tax returns. If you work for yourself, you must show that you have earned a consistent income over the preceding few years. This will be evident in your tax returns.
- Business articles of incorporation: Lenders will be able to evaluate if you are able to pay your expenses on time and have enough money for your mortgage payments by looking at your business’s articles of incorporation.
Financial Records of Individuals
Any personal information that has an impact on your capacity to pay your mortgage or demonstrates your creditworthiness, such as the following, maybe requested:
- Bank account details: For mortgage payment purposes, your lender will need access to your bank account and transit number.
- Assets or investment statement: Your assets and investments will be worth a particular amount, which can be used as part of your down payment or just as a safety net in the event that your income falters.
- Letter of pre-approval (if appropriate): Your lender will want to see this documentation if you were pre-approved for a mortgage (which is highly recommended).
- Credit report: Your lender will obtain a copy of your credit report on your behalf, which will include your credit score and assist in proving your creditworthiness.
- Any extra income streams (if any): Your lender may ask for anything else you have that can confirm your entire income.
Documents for Making a Down Payment
To get a mortgage, you’ll need to put down a deposit on a new home, and that money will have to come from somewhere. Here are some documents you may be needed to present to establish the source of your down payment funds.
- Savings or investment statement from the previous 90 days: Any money you’ve saved or earned through investments in the last 90 days should be delivered to your lender in the form of a written record.
- A contract for the sale of an existing property: Any funds from a previously sold home that will be utilised for your down payment must be demonstrated to the lender, which you can do by providing documentation of the real estate transaction.
- Withdrawals from your RRSP (if applicable) through the Home Buyer’s Plan (HBP): If you’re buying your first home, the Home Buyer’s Plan may allow you to contribute money from your RRSPs to your down payment.
- Gift Letter (if applicable): If you are utilising money from a friend or family member as a down payment, you will need to provide a Gift Letter confirming that the money was given as a gift and does not need to be repaid.
Documents Related to Real Estate
Both the property you’re selling and the one you’re buying will require documentation from your lender.
Mortgae Documents Relating to the Property You’re Buying
- Agreement on purchase and sale: This paperwork will outline the terms of your property purchase as well as the amount you will be paying. This information will be needed by your lender to estimate your principal amount and confirm the proportion of your down payment.
- MLS listing: The lender will want to view your home’s original MLS listing, which will include other crucial details such as property tax projections, condo fees (if applicable), and heating costs.
- The legal description of the home: The whole address and postal code are included in the legal description of the home.
- Certificates for wells and septic systems: These are primarily for rural properties.
Mortgage Documents Relating to the Property You’re Trying to Sell
Recent mortgage statement: A recent mortgage statement will show the lender how much you still owe on the house and how much equity you have.
The legal description of the home: This information should be available from the home’s original purchase agreement or your property tax statement.
The Bottom Line
At Lionsgate, we specialize in helping people get the extra cash they need, obtain funding for private mortgages, as well as for other real estate transactions. If you are looking to buy land in Canada, get a mortgage or apply for a loan, fill out the form below. Or, You can leave us a message and we will try to connect you with local lenders and sources that best meet your needs.
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