How To Get Ready For Your First Appointment With a Mortgage Broker
f you're planning to finance your real estate purchase, one of your first steps should be to connect with a mortgage broker. They’ll guide you through the financing process and help you gather the necessary documents. Here’s a handy checklist to keep you organized:
Essential Documents for Financing
Income Verification:
Job Letter: This should include your start date, position, salary, guaranteed hours, and contact info for verification. Make sure it’s dated within 30 days of your accepted offer.
Most Recent Paystub: A current paystub helps confirm your income.
Self-Employed? Provide your last two years of income tax returns, including Notice of Assessments and proof of taxes paid.
Pension Income: Include Tax Assessments (TAs) if applicable.
Bank Statements: Submit three months’ worth of statements showing your name and any pension deposits.
Child Tax Benefit: Proof is required if applicable.
Support Payments: Documentation needed if applicable.
Down Payment:
Bank Statement History: A full 90-day history of your bank statements showing the down payment funds with your name.
Gift Letter: If your down payment comes as a gift, you’ll need a letter from the family member and proof of the deposit into your account. Your broker will provide the gift letter template.
Strata Documents (if applicable):
Form B
AGM Minutes: Two years' worth
Strata Council Minutes: Last three months
Bylaws
Additional Documents (if applicable):
MLS Listing & Contract of Purchase and Sale
Property Disclosure Statement
Copy of Title
Separation/Divorce Agreement
Mortgage Statements: Proof of paid property taxes for other owned properties.
Tenancy Agreements: If you own rental properties.
Void Cheque/Preauthorized Debit Form
Understanding Your Mortgage Qualification
Your ability to qualify for a mortgage hinges on debt servicing, which is how well you can manage your debt payments. Lenders will assess the portion of your income that goes towards housing and other debts, adhering to maximum limits for both Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. These limits can vary based on the lender.
Gross Debt Service Ratio (GDSR):
This ratio includes all housing costs—mortgage, property taxes, heating, and half of your strata fees (or full rent if applicable)—divided by your gross income to give a percentage.
Total Debt Service Ratio (TDSR):
This encompasses all housing costs plus any other debts like car payments, loans, credit cards, and other mortgages. Similar to GDS, this total is divided by your gross income.
Why Pre-Approval is Key
Every client’s financial situation is unique, and a variety of lending solutions may be available. It's crucial to collaborate with your mortgage broker before you start house hunting. This allows for a comprehensive assessment of your finances and helps identify your maximum debt service ratios.
If you’ve been pre-approved for a mortgage, tread carefully! Changes to your debt or employment status before closing can jeopardize your approval. Staying informed and prepared is the best strategy for a smooth home-buying experience.
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