Mortgage Application Basics

Everything you need to know before you apply

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As your Hamilton mortgage broker, we will need to complete a mortgage application on your behalf. You will need to provide documents and information from both the applicant and any guarantors. Don't worry, our team will make sure you have everything you need to successfully acquire the mortgage you want.

What You'll Need

BASIC INFORMATION

  •  Full name and date of birth,

  •  Address and postal code, how long you have lived there,

  •  Previous address and how long you lived there,

  •  Social Insurance Number,

  •  Number of dependents,

  •  Home and work phone number,

  •  Name and address of employer,

  •  How long you have worked there and your present position,

  •  Your gross annual income, (see below for self-employed)

  •  Your previous employment details,

  •  Your current assets and liabilities,

  •  How much you have for your down payment.

  •  All monthly payments.

GROSS MONTHLY INCOME

Gross annual income is the total income that you are paid by a company before any deductions are subtracted. We will usually have to verify your employment by an employment letter from your payroll department confirming your information Some lenders may allow you to prove income by showing two years of income tax returns and some current pay stubs.

SELF EMPLOYED INCOME / COMMISSION INCOME

Mortgage lenders require different information from people who are self-employed or work on commission. Most require either two or three years of tax returns. Most will accept a tax return prepared by an accountant. If you prepare your own tax return they may also want to see the ‘notice of assessment’ sent to you by the Government. The lender will then take your average NET income. Some lenders may permit you to ‘add back’ some deductions to your net income.

ASSETS

Assets include:

  •  Canada Savings Bonds

  •  Cash in bank accounts

  •  Cash surrender value of a life insurance policy

  •  GIC’s (guaranteed investment certificates)

  •  Mutual funds

  •  RRSP’s (registered retirement savings plans)

  •  Stocks

  •  Vehicles

  •  Other real estate property already owned.

LIABILITIES

These are your outstanding debts including:

  •  Credit card balances

  •  Credit lines

  •  Loans

  •  Other mortgages

Your mortgage broker will need to know your current balances, your current payments and the dollar limit of credit cards and credit lines.

NET WORTH

The total value of all your assets, minus the total of all your debts equals your net worth. If your debts are more than the total of your assets, you are said to have ‘a negative net worth’.

DOWN PAYMENT

The amount of money that you are paying towards the purchase of your home is called the downpayment. This is also known as the ‘equity’ that you will have in the property. You should have a good idea of how much you have before talking to your mortgage broker. You will have to show lenders proof of your downpayment – for example: if it is in a savings or investment account, or an RRSP, most lenders will require proof that you have had the funds for three months.

If the down payment is a gift from a family member, you will eventually have to get them to sign a letter saying that the money is a gift and not to be repaid. You may also need to show proof that they have the funds and the funds must be transferred into your account prior to closing date.

Normally the minimum downpayment allowed is 5% of the accepted purchase price (or appraised value, whichever is lower). However, the less money that you need to borrow, the less you will have to repay! If you have less than 20% as a downpayment then you have a High Ratio Mortgage and if you have more than 20% as a downpayment then you have a Conventional Mortgage.

TOTAL MONTHLY PAYMENTS

These include payments on your credit cards, credit lines, loans and other mortgages. However, it also includes other payments that you must make each month – such as child support, spousal payments and lease payments for a vehicle. Also included are any loans or mortgages that you have guaranteed for other people. Other ‘normal’ payments such as Income tax, phone bills, hydro bills, vehicle or house insurance etc. are not included as they fall into the 60% of your gross income.

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Ready to begin your application or have any additional questions or concerns? contact Mission 35 today!