Common Frustrations Shared By Mortgage Applicants
“Why do they need THAT?”
“It wasn’t like this the last time I bought a house”.
One of the common frustrations shared by mortgage applicants is the amount of paperwork required to get a mortgage. With interest rates higher right now I’m finding lenders are being even more particular about what they require to approve mortgage applications.
While it may seem like a tremendous amount of documentation is required, we need to step back and think about the fact that we are asking a lender for several hundred thousand dollars.
Would you lend this amount of money to someone you barely know?
Lenders don’t ask for additional paperwork to make your life difficult. They are doing their due diligence to ensure that you will be able to repay your mortgage.
Under Canada’s anti-money laundering legislation and anti-terrorist financing regime, potential lenders are required to document large or suspicious deposits.
How can you make this a little more straightforward on your end?
If you are getting ready to buy a home, make sure your paperwork is organized.
Process-wise, I send my clients a list up front of the documentation they will most likely need for their mortgage approval. It may seem like overkill in some cases, but by being organized upfront I am often able to have an approval within a few days … and sometimes even the same day.
Regardless of how prepared we are upfront, lenders will sometimes ask for additional information, so don’t be surprised if you are asked for even more documentation.
Many lenders require verification of two years consistent employment so it is helpful to dig out T4s and Notices of Assessment from Canada Revenue Agency for the last two years.
You will need to ask your employer for a letter that outlines your salary, position, and start date. You will also be asked for a current pay stub.
You will need to demonstrate where your down payment is coming from. Lenders need a ninety-day history, so that means you will need to provide bank statements for the last three months. It is key that the statements you provide clearly show your name and account number. DO NOT scratch out the transaction list as lenders will not accept this.
If you have any large deposits during the last three months (generally over $2,000) you will also have to show a ninety-day history for those funds.
If you are self-employed, you will likely require additional information. Depending on the mortgage product you are using, expect to be asked for your Notices of Assessment and complete T1 Generals for the previous two years. If you are incorporated, you will likely be asked for confirmation of that.
A mortgage broker recently used an analogy with one of his clients. The client was a tradesperson. The broker explained that if the client didn’t have all of the materials and supplies needed he would not be able to complete his construction project. For a mortgage broker, your paperwork is the equivalent of those materials and supplies.
Without the proper paperwork, we cannot get your mortgage approved.
If you are thinking about buying a home, or already out looking, the more prepared you are with your paperwork the smoother your approval will go. And your mortgage professional will be very grateful.
