Starting January 1, 2018, all uninsured mortgages will have to undergo a stress test, meaning you need to be approved at 2% higher than your agreed upon rate. This news has many people scrambling to secure a mortgage before the end of the year, which is why we’ve compiled a list of everything you need to do so.
If you’ve bought a home before, you know the drill, so this is mostly for first-time buyers who need all the ammo they can get their hands on.
Keep in mind that depending on your lender (bank or mortgage broker), they may request different documents. We’re just giving you a solid list of things to have ready so the process can go as smoothly as possible.
1) General Income Tax Form
This is also called a T1. This is what you use to complete your personal income tax return. It includes a lot of crucial information your lender wants to know, including your total and net income, and your refund or balance owing.
2) Notice of Assessment (NOA)
This is tied in with your Income Tax Return. You’ll receive it after the government has assessed the return you filed. Most importantly, the NOA lets you know about any action that needs to be taken, meaning whether you still owe money or not.
3) Deposit receipts
If you purchased new construction from a builder, then the builder or their lawyer can provide deposit receipts or a statement of deposit receipt. If you purchased resale, work with your real estate agent to secure this.
4) Copy of signed purchase agreement
It’s pretty obvious why your lender wants to see this. You need to prove that you’ve actually signed an agreement to purchase a home! That agreement also has some crucial info like purchase price and conditions.
5) Estimated condos fees
If you bought a new condo, then your lender will want to know what your monthly condo fees will be because it factors into your shelter costs. For example, if you can afford $1,400 a month, but your condo fees push your monthly expenses to $2,000 a month, that’s a red flag for lenders.
6) Additional banking info
If you have any savings or investments, make sure your lender is aware of them. If it’s money you can access, then it’s valuable when determining your eligibility. Most banks allow you to print reports or proof of these types of assets from their websites.
7) Credit score
If you’re working with your primary bank and talking with a mortgage specialist, they can likely access your credit score right on the spot. More importantly, you should understand what affects your credit score.
8) Business financials
This only applies to business owners and freelancers. The money in your business is technically yours since you own the business. Many lenders won’t see this as an asset and actually consider entrepreneurs to be more of a risk, but it’s worth sharing.
If you’re a sole-proprietor, then you have full access to the money in your business. If you have partners, that’s a different story and the lender may not care about the business bank account.
9) Gift letter
This one only applies to buyers that have financial support from parents or other family. You’ll need a signed letter from the gifter stating how much money is being gifted. It’s possible that your parents or family will have to prove their income and show that they have access to the amount of money being gifted.
If all of these things are in order, then you are prepared to apply for a mortgage! And don’t be afraid to shop around – once you have everything a lender needs, you should see where you can get the best rate.