Posted on by Annie de la Chevrotiere

Paperwork! Enough Already!!

When you are applying for a mortgage, how organized you are with your paperwork plays a part in how smoothly the process will go, and whether or not you secure the final approval.

As usual, there are certain documents that are critical in the credit review process that are needed up front. However, now the banks also have Compliance rules that they have to follow over and above the risk assessment part of the process. Fuelled by anti money laundering laws, this means a paperwork marathon like never before.

Here is list of the paperwork that will be requested from you:

Application:

Employment Verification:

  • If you are self-employed, your last 2 to 3 year’s personal T-1 General tax returns (all pages) + the Notice of Assessment (NOA) to go with each year.
  • If you are incorporated, your last 2 to 3 year’s company financial statements.
  • Proof of company ownership may also be required.
  • In addition to the income documents, the banks usually want a secondary confirmation of your self-employment. This can be by way of a business license, GST returns, Certificate of Incorporation, or the Statement of Business or Professional Activities in your personal tax return.
  • If you are a salaried employee, a signed employment letter on company letterhead confirming how long you have been with the company, your position, and salary + a couple of your most recent paystubs. If you are new, the letter should confirm if you are still on probation or passed probation.
  • If you are on maternity leave, the letter should state your return-to-work date.
  • If you are paid hourly, a signed employment letter on company letterhead as above, but instead confirming your hourly rate and your guaranteed hours per week + a couple of your most recent paystubs.
  • Hourly paid workers also have to provide their last 2 year’s Notices of Assessment to accompany the employment letter.
  • If you are paid bonuses, the bonus structure should be outlined in the letter, and also supported with your last 2 year’s NOA’s.

Downpayment Confirmation:

  • For a purchase, the banks want to see the amount of downpayment confirmed + 1.5% of the purchase price for closing costs.
  • They will request a 3-month history of bank statements. If there are any large deposits, they will ask for proof of where the funds came from, ie if money has come from family, a signed gift letter is needed. The amount of the deposit and the gift letter need to be the same. If you have sold a vehicle, they will want to see the paperwork confirming the sale.
  • If you have sold other real estate for the downpayment, they will want to see the contract with the subject removal addendum pages, and the Seller’s Statement of Adjustments to confirm the amount of funds you are receiving. They may also ask for a copy of the Order to Pay, and any accompanying mortgage statements.
  • TFSA & RRSP statements.
  • A bank statement showing all available funds in your account must be provided 30 days prior to closing.
  • If you are non-resident and wire transferring funds to Canada, the funds should be in your Canadian account 15 to 30 days prior to completion. The number of days depends on the lender; plan with 30 days to be safe.
  • Funds from any source will have to be properly documented.
  • Internet printouts are OK as long as they have your name on them. If they do not, we can still work with the printouts as long as you can provide an actual previous statement so we can match your name to the account number.
  • If you transfer funds from one account to another, be prepared to provide 3-months worth of statements for each account. The banks want to see the paper trail of the money.

Purchase Contract Documents:

  • All pages of the accepted offer.
  • MLS or WLS listing for property information.
  • If the purchase is a private sale, a full appraisal will be required.
  • Property Condition Disclosure Statement (PDS).
  • If a strata property, depending on the lender, you may have to provide the last 6-months regular strata meeting minutes, and the latest Annual General Meeting minutes.
  • If you are doing a Purchase + Improvements, written quotes/estimates are needed for the work that is going to be done.

Mortgage Transfers and/or Refinances:

  • Income documents as above.
  • Property tax statement.
  • Registered Land Title Form B.
  • Fire insurance.
  • Strata documents may be requested.
  • Current mortgage statement.

Other Documents:

  • Photo ID.
  • Mortgage statements and proof of rental income if you own other properties.
  • Property tax statements & confirmation of strata fees for other properties.
  • If you own other property that is clear title, a title search will be requested to confirm there is no registered financing against it.
  • Line of credit statements to confirm outstanding balances, payments, and limits.
  • Separation or Divorce Agreement.
  • Banker’s reference letters on bank letterhead. Letters must be signed and with the contact details of the person signing. The letter(s) should state how long you have been clients of your bank and if all dealings have been satisfactory. These letters are important for non-residents, and/or for anyone who does not have a credit report.

If you are thinking of getting into the real estate market, review the above list and start getting organized early. If you have not filed your taxes, talk to an accountant if you are in a rush. Accountant prepared tax returns are usually more accepted than if they are prepared by yourself. Accountants can also track the availability of the Notice of Assessment on-line, getting it into your hands sooner.

It seems like a lot now, but if you get ready in advance, whether it is for a purchase, a refinance, or a transfer at your renewal, it will be that much smoother and less stressful when you are ready to go!