Residential Mortgage Application Process

“Here’s The Basic Residential Mortgage Application Process That Applies To All Mortgage Applications”

One of the best ways to make the residential mortgage process go as smoothly as possible is to be prepared for what you’re likely going be asked by various mortgage lenders.

The basic residential mortgage process can be broken down into these three steps:

First, you’re going to be asked to complete a personal profile or application form. Some of the information required will vary from lender to lender, but all will require you to provide at least the following:

  • Your full and proper name,  current address of residence, date of birth, and social insurance number.
  • The name of your present employer, the time you’ve worked there, and your current salary or wage.
  • A personal networth statement listing out all the assets you own and all the debts you owe including credit cards, lines of credit, loans, and mortgages.

The last part of the application form will include an authorization statement that allows the lender to access your personal credit report as part of the application process.  By signing and dating the application form you are confirming that the information provided is accurate and that you are providing your consent for the mortgage provider to access your personal credit profile.

The second part of the application process is to confirm your income, down payment, and property value. Here are the most common verification steps:

  • Employment verification.  This can be done via an employment letter from your employer and/or a copy of your of your most recent pay stubs.  In addition you may be asked to provide a copy of your last years T4 slip and/or a copy of the last notice of assessment you received from CRA.  For self employed individuals,  the last three notices of assessment are typically required and potentially the financial statements of the business.
  • For a real estate purchase,  a copy of the purchase and sale agreement along with any available real estate listing information will be required to validate the transaction.  If you’re also selling your existing home at the same time, then a copy of the sale agreement would also need to be provided along with the statement of mortgage if a home mortgage is outstanding.
  • Down payment.  The amount of the down payment will need to be verified via bank statements.  If the down payment is coming out of your savings, then the last 3 months of bank statements will be required to verify the build up of funds.  Any gifts or donations will have to be supported by the provider indicating that the funds are not required to be repaid.
  • For real estate purchases where at least 20% of the purchase price is paid in cash, a real estate appraisal will be required as these mortgages will not be covered by mortgage insurance.

Once all the documentation has been received and verified, the last step in the residential mortgage application process is the mortgage approval.  The mortgage lender will provide  a written mortgage approval  for you to review and sign.  In addition to signing off on the mortgage approval, you will also have to provide a void cheque  for setting up a preauthorization payment, and the contact information of your lawyer.

The lawyer will receive all the legal documents and mortgage instructions which he or she will review with you prior to your execution of the legal documents that will complete the mortgage process.

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    About the Author Joe Walsh

    I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel