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It’s been well documented that buying a home is one of the most stressful things Canadians will ever do. There are so many details – choosing the perfect location, finding a home that meets your needs, negotiating the purchase, dealing with the entire moving process, and last, but not least, getting approved for mortgage financing.
Mortgage financing can be one of the most difficult aspects of buying a home, in part because there are so many documents required by your lender before your approval can be finalized. Following is a list of mortgage loan documents to reference to make sure you’re completely prepared when the time comes.
The following documents pertain to the property you’re purchasing and will be required by your lender to complete your mortgage application. You can usually obtain these documents from your real estate agent, or they will often forward them to the mortgage company on your behalf.
Purchase Agreement – When you enter an agreement to buy a home, the details of the transaction will be captured in a legal contract, known as a purchase and sale agreement. This is where you’ll record the price and the possession date, as well as any conditions that are benefitting both the buyer and seller. The agreement must be signed and witnessed by a third party. Your mortgage lender will need a copy of the agreement before they can proceed with a full mortgage application.
MLS Listing – If the home you’re buying was listed through a REALTOR® (as opposed to a private sale), your lender will likely require a copy of the MLS listing. This document contains pertinent information about the property, including a picture of the home, and the listing price. Your REALTOR® will be able to provide you with this document.
Property Disclosure Statement (if applicable) – In lieu of a home inspection, home buyers often request that the seller complete a Property Disclosure Statement. This document is a checklist of various issues/problems that can occur i.e., a leaky roof or foundation, rodent problems, the presence of mould, asbestos, etc. The seller must complete the form to the best of their knowledge, and attest to any issues that were encountered while they occupied the home. If this document formed part of the sale agreement, you will need to provide it to your mortgage lender.
Satisfaction Of Conditions (if applicable) – If the buyer or seller included conditions in the purchase and sale agreement, you will need confirmation that those conditions were satisfied. A satisfaction of conditions statement will be signed and witnessed and will need to be provided to the lender as soon as the conditions are met.
Prior to mortgage approval, you’ll need to provide your mortgage lender with documents to support your income – specifically, your ability to manage the mortgage payments. Not all income sources will be acceptable, however. For example, most lenders will not consider government benefits, such as the monthly Child Care Benefit, or Employment Insurance as qualifying income. What’s acceptable varies among lenders, so it’s a good idea to check with yours early on so that you’re fully prepared.
Recent Pay Stub – If you’re a salaried or hourly employee whose hours don’t fluctuate, you’ll likely be able to submit a recent pay stub as confirmation of income. Your pay stub will need to be no more than a couple of months old and must display the following information: The name of the employer and employee, salary amount or hourly rate, and the number of hours worked, both for the pay period and year-to-date totals.
Canada Revenue Agency Notice Of Assessment – You know the document that the government mails you after you’ve completed your taxes each year? The one that summarizes your tax return information, and includes other details, such as your up-to-date Registered Retirement Savings Plan contribution limit? That’s your Annual Notice of Assessment. You’ll want to make sure you have the most recent years available. If you’re self-employed, you’ll likely need to provide your lender with NOAs going back 2 or 3 years. If you cannot locate your NOA, you can check with your accountant, or obtain copies directly from the CRA.
Confirmation Of Direct Deposit (Bank Account Statement) – If you receive employment or pension income via direct deposit to your bank account, your lender may accept a recent bank statement as proof of income. Bank statements can also be used to confirm your source of down payment.
Separation Agreement (if applicable)– If you’ve been recently separated, you may need to provide a copy of your separation agreement to your lender, so that they can confirm whether you have any additional financial obligations, specifically a monthly spousal or child support payment. If so, this amount will need to be included as a monthly expense and can impact your mortgage affordability. On the income side, if you receive spousal or child support that’s documented in a separation agreement, this amount may be added to your income, improving your overall affordability.
Down Payment Documents
Investment Statements – Your mortgage lender may require you to provide statements for any investments that you declare during the mortgage application process. This can be used to confirm your source of down payment or just your overall creditworthiness. If your down payment is coming from your chequing or savings account, a recent bank account statement will also suffice.
Gift Letter (if applicable) – If your mortgage down payment is coming in the source of a gift from a parent or other close family member, your mortgage lender will require that you provide a gift letter, signed by the person gifting the funds to you. This letter confirms that the funds are indeed a gift, not a loan, and that there is no repayment expected.
Other Required Documents
In addition to the above list, you may be required to provide other documents/ information when you’re trying to obtain a mortgage, including but not limited to the following:
- Driver’s license or government issued photo ID
- Copy of your home insurance policy
- Confirmation of loans/credit card balances
- Your lawyer’s information (name, address)
- Copy of a void cheque
- Your current mortgage statement (if applicable)
- Certificate of independent legal advice
Documents Required For Mortgage Preapproval
If you’re obtaining the recommended mortgage preapproval, your lender won’t require any property documentation. That’s because, at preapproval, you haven’t yet entered an agreement to purchase a specific home, your lender is simply qualifying you based on your income and your creditworthiness. When you do find a house to purchase, that’s when you’ll return to your lender with the purchase and sale agreement, MLS listing, etc.
Mortgage Loan Documents Checklist – Summary
As you can see, the list of documents required to obtain a mortgage can be a long one. Chances are, you won’t need to provide everything from the above list when you go to get a mortgage, but at least now you have an idea of what you might need, and why. Be prepared by setting aside any documentation that you have in advance. Doing so will also help to relieve some of the stress of buying a home.
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Tom Drake is an authority in Canadian personal finance. He is a financial analyst and has been writing about personal finance since 2009 at the award-winning MapleMoney. His work has appeared in MintLife, Canadian MoneySaver, and U.S. News & World Report, and has been quoted in The Globe and Mail, Yahoo Finance, and Financial Post.