Lenders want plenty of financial information about you and your co-buyers to assess your ability to repay the loan. This ability is based on your GDS (Gross Debt Service Ratio) and TDS (Total Debt Service Ratio), also your assets, liabilities, earnings, employment history and your past record of repaying loans (credit bureau).
Specifically your lender will want the following:
- Personal information - birth date, social insurance number, martial status.
- Details of employment, including proof of income (employment letter,T-4 slips, personal income tax assessments, or current pay slips). If self employed, 3 years of financial statements of the business and 3 years of individual income tax returns, supported by notice of assessment from Revenue Canada.
- Other sources of income (rental income, pensions, etc.)
- Current banking information
- Verification of your down payment (copies of bank statements, RRSP statements)
- Consent to run a credit bureau report
- Details on assets, including property and vehicles
- Details on liabilities, including credit card balances, monthly payments, car loans, and personal line of credit and any other monthly payments
- A copy of the property listing (MLS) you have made an offer on
- A copy of the purchase and sale agreement on a resale home
- Purchase contract, plans and cost estimates on a new home.
- The condominium financial statements, if applicable.
- A certificate for well and septic, if applicable.
Pre-Approval
A pre-approval mortgage is very common. With a pre-approval, your lender approves the amount of your mortgage and gives you a written confirmation or certificate for a fixed time period before you start looking for a home.
The pre-approval term also sets the mortgage rate the lender will offer to you. If rates go down in that period, the lender should offer you the new lower rate (CIBC’s pre-approval lasts 90 days).
Pre-approval gives you a head start on house hunting, but your final approval is still subject to an appraisal of the value of the home and a current review of your finances.