Applying for a mortgage may seem overwhelming, especially for first-time homebuyers. But with the right guidance, completing a mortgage application can be a smooth, straightforward process. This guide provides a comprehensive mortgage application checklist for Canadians, walking you through each step to boost your chances of approval and avoid costly delays.
Why Accuracy Matters in a Mortgage Application
A well-prepared and accurate mortgage application significantly improves your chances of getting approved quickly. Avoid mortgage application delays by double-checking every detail. Inaccurate information, such as misstated income or incomplete address history, can lead to red flags during the mortgage underwriting process.
Real-World Example:
Emma, a first-time homebuyer, mistakenly listed her annual income as $75,000 instead of $72,000. The lender flagged the inconsistency during underwriting, which resulted in a two-week delay.
Section-by-Section Mortgage Application Checklist
1. Personal Information
To start, you’ll need to provide personal details including your name, date of birth, and contact information. For first-time homebuyers, it’s crucial to understand that providing your Social Insurance Number (SIN) is optional but recommended for retrieving your credit report accurately.
Tips:
- Maintain a three-year residential history.
- Use landlord letters or utility bills to verify past addresses if needed.
2. Employment and Income Details
Lenders need a detailed employment history going back at least three years. Whether you’re salaried, hourly, commission-based, or self-employed, income verification is key.
Documentation Required:
- Salaried: Employment letter, T4s, recent pay stubs
- Self-employed: Two years of NOAs and business financials
- Commission-based: Two-year income average
- New graduates: Student status verification if work history is limited
Real-World Tip: Samantha, a real estate agent, delayed her purchase by six months because she didn’t realize she needed two years of tax returns to verify her commission-based income.
3. Assets Overview
A snapshot of your financial standing includes bank accounts, investment holdings, vehicles, and real estate. Providing this helps lenders understand your net worth.
Key Assets to List:
- Bank balances (chequing/savings)
- RRSPs, TFSAs, stocks
- Vehicles (with estimated value)
- Other property holdings
Pro Tip: Round asset values to the nearest $1,000 to simplify the application.
4. Liabilities and Debts
Your debt-to-income ratio is a crucial factor in mortgage approval. Ensure all liabilities are listed, even if they don’t appear on your credit bureau report.
Common Liabilities:
- Credit cards
- Car loans/leases
- Student loans
- Lines of credit
- Support payments (alimony/child support)
5. Existing Property Ownership
If you already own real estate, include the following:
- Address
- Estimated current market value
- Annual property taxes and condo fees
- Rental income details (if applicable)
Real-World Insight: Sarah forgot to include rental income from her investment condo. This omission inflated her debt ratio, reducing her approved mortgage amount.
6. Current Mortgage Obligations
Lenders require current mortgage balances, monthly payments, and lender details, especially if you’re carrying a second mortgage or HELOC.
7. Subject Property Details
The subject property is the home you’re buying or refinancing. Include:
- Full address
- Type (detached, condo, etc.)
- Square footage and lot size
- Estimated taxes and utilities
- Year built and heating type
Example: A couple purchasing a condo underestimated their property taxes. When corrected, their lender adjusted affordability, reducing their approved loan amount.
8. Requested Mortgage Terms
Specify:
- Mortgage amount
- Down payment and its source (savings, gift, home equity)
- Amortization period (typically 25-30 years)
Tip: Don’t worry if you’re unsure about the interest rate. Your mortgage broker will help finalize the terms after pre-approval.
Final Thoughts: Improve Your Chances of Mortgage Approval
Completing your mortgage application correctly is the foundation of your homeownership journey. To increase your chances of approval:
- Work with a licensed mortgage broker: They offer personalized advice, catch errors, and clarify confusing sections.
- Be proactive: Prepare your financial documents before applying.
- Ask questions: There are no bad questions when it comes to securing a mortgage.
By following this detailed guide, you can confidently complete your mortgage application and be one step closer to owning your dream home.