Documents you need for a mortgage pre approval

When looking for a home, getting a pre approval is a very important step.  The quality or thoroughness of a pre approval review can range from completing an online pre approval calculator to at the other end, having a lender review and approve an application.  As well as, having your supporting documents (i.e. income verification) reviewed and accepted by your mortgage broker in Ottawa. Here are the documents you need for a mortgage pre approval.

Buying a house and getting a mortgage is a large step in one’s life. The more detailed the pre approval review, the better the chances there will be no surprises that rise during the process.

Typically an underwriter at bank or lender will not review documents at the pre approval stage so working with an Ottawa mortgage broker to apply for a mortgage in Ottawa can be an extra line of defence. The Ottawa mortgage broker can review your documents upfront and let you know if there will be any challenges. 

Documents for a mortgage pre approval

I am routinely called by very stressed and panicked clients as their bank is not able to approve them for their mortgage, even after being pre approved with their bank originally.

Often in these cases, documents were not verified at time of pre approval. For example, a client who says they earn $50,000 a year, may be hourly, on contract, self employed, including their bonus, on probation, and so on. In all these examples the lender will not be using your current $50,000.  The lender will be looking to a two year average of your taxable income or not able to use your income due to being on probation.

If your average income is lower, this can dramatically affect your pre approval amount when applying for a mortgage. Or if your most recent income is less than your previous year, a lender may only use the lower, most recent, amount.

Therefore, to avoid problems, having your documents reviewed upfront is crucial to assure an accurate pre approval when applying for a mortgage. The best documents to confirm upfront are income and down payment. These are the two most common areas where things can go wrong.

Below is a list of documents that should be reviewed upfront.

Income verification:

• • • If you are salaried:
      • a pay stub
    • For all other incomes that are not base salary only:
      • a pay stub (if applicable)
      • a letter from your employer (if applicable)
      • your last two years Notice of Assessments
      • your last two years T1 Generals
      • your last year T4 (if newer to your current employment)

Down payment verification:

• • • If from the sale of a property:
      • the MLS listing
      • a mortgage statement
      • the sale agreement
    • If from savings:
      • 3 months of account statements showing the funds history
    • If a gift:
      • nothing needed at the pre approval stage

If you feel you cannot provide any of these documents during the mortgage process, it is better to let your mortgage broker know early in the process. Knowing the documents for a mortgage pre approval upfront will also allow you more time, while home hunting, to be collecting the documents.