Mortgages for employees
Your employment status is one of the key factors lenders in Toronto and throughout Southern Ontario consider when you apply for a mortgage loan. A good mortgage agent can help you qualify for a mortgage loan that fits with your current employment situation.
Permanent employee
If you are a full-time, or part-time employee with a guaranteed base salary (before overtime and bonuses) your mortgage broker will ask you to provide:
- An current letter from your employer
- Recent pay stub
- Recent T4 tax slip/NOA (If you do received a bonus and over-time, you’ll be asked for two T4s, so an income average can be worked out
Keep in mind that if you are a newer employee, lenders will typically want to ensure you have passed the probationary stage.
Casual Employment
You will need:
- A current letter from your employer
- Recent pay stub
- Your two most recent T4s/NOAs
Retired
If you’re retired and need a mortgage, you’ll be asked to provide:
- T4s/NOAs
- Your past three months of bank deposits confirming pension income
- Any relevant pension letters you may have
Mortgage down payment requirements
When applying for pre-approval, you will also be asked to provide some information regarding your down payment. Your mortgage agent will need to know where the down payment is coming from, and how long you have had the money in your account. Depending on the source, you will be asked to provide the following:
Applying for a mortgage using savings, RRSPs, TSFAs or other investments
If your down payment is coming from any of the above, you will need to provide statements indicating that the funds have been in your account for 90 days. These can be actual statements, or screen prints from online banking.
If funds have not been in your account for 90 days, you will be asked to show where the funds are coming from. Examples of alternative sources of funds for mortgage qualification could include:
Mortgage gifts
If your down payment is being gifted to you, you will need to show proof of the funds in your account 2 weeks before closing your mortgage. Please keep in mind a gifted down payment needs to come from immediate family.
Sale of an existing property
If you plan on making a down payment with funds from an existing property, you will need to provide a copy of a firm contract of sale. If the sale has already gone through, and you already have the money, your mortgage agent will need a copy of a bank statement, as well as any adjustments.
Existing properties and debts impact mortgage applications
Ontario lenders will also want to know if you own any existing properties, including rentals. You will need to provide copies of any existing mortgages, signed tenant leases, and proof of rent deposits.
If you have any outstanding unsecured debts (debts not tied to any collateral – credit cards, unpaid tax bills, etc.), lenders may apply a 3% re-payment based on balances that appear in your credit report. For outstanding student debts, this may drop to 2%.
If the debt is secured, i.e., a secured line of credit, lenders will likely use an actual payment to amortize the balance over 25 years.
Wondering about your credit?
If you’re wondering about your credit, Capital 360 Mortgage recommends applying for a credit check on your own, through Equifax.