e51 - Loan and behold! What documents do we NEED?

[00:00:00] So the topic today is, um, documents don't get excited.

[00:00:06] I'm excited.

[00:00:10] You've landed on the Mortgage Life Podcast where we strive to bring you mortgage related info that's easy to understand.

[00:00:19] We have conversations with market experts to bring you timely updates because there's one certainty in this industry, things change.

[00:00:28] I'm Mindy Baudlin.

[00:00:30] And I'm Pete Salamose. Welcome to The Mortgage Life Podcast.

[00:00:42] I find like, for, in my experience, you start the conversation off with a client and everybody's friends and everybody's excited.

[00:00:53] And then you start asking the questions and you get the information and then it's like, okay, so this is what I'm going to need in order to verify your information.

[00:01:03] And we typically send a request through our, our software portal.

[00:01:09] And it's, it's a long list of things that we need to see.

[00:01:13] And it's almost like the phase in the relationship where it's like, you know, things get a, might maybe a little bit resnickety sometimes.

[00:01:21] Like, I think clients feel like they're being sort of raked over the coals a bit, but it's, it's not like that.

[00:01:28] We have to prove to the lender without a shadow of a doubt, the information that you tell us.

[00:01:35] So that's why we need documents.

[00:01:36] Exactly. And I get this comment quite a bit.

[00:01:41] Yeah. If someone has done a mortgage in the past or their, their folks, relatives, whoever have talked to them about mortgage is that I've, I've never had to do this in the past.

[00:01:50] And that is an absolutely true statement.

[00:01:54] Today we live in an environment, especially in the lending world where people are required to produce a lot of documentation.

[00:02:03] Lenders want proof of absolutely everything because they're regulated so heavily and so is our industry.

[00:02:09] So we're asking for more stuff, but this really brings us to the, to the big question about this conversation about documents.

[00:02:17] Like why do documents even matter?

[00:02:20] Yeah. And again, it's, it's the proof, right?

[00:02:25] Exactly.

[00:02:26] Yeah. Let's go do that.

[00:02:29] We've got a cat in the room.

[00:02:30] Um, so documents do matter because they are the proof.

[00:02:35] Like Mindy says, it's the proof and it's kind of a few steps.

[00:02:39] So like it proves what your income is and your income is the number that we use to calculate things.

[00:02:45] Like how much of your income can be used to service the mortgage debt.

[00:02:49] So your gross debt service, how much of your income can be used to service all your debts, the total debt service.

[00:02:56] So these are things that, that really basically mean that your income documents determine how big a mortgage you can get.

[00:03:03] Yeah.

[00:03:03] So that's why it's important.

[00:03:05] I mean, we would love to believe everything that you tell us.

[00:03:08] Yes. And for the most part we do, but, uh, we do need to see that as well.

[00:03:12] And most importantly, the lender does because the lender doesn't actually interact with the client in the beginning, right?

[00:03:18] They rely on the information that we provide to, to look at this file and say, Oh, okay.

[00:03:25] Yeah, no, this number works.

[00:03:27] We can do this.

[00:03:28] So as far as income documents go, no job is the same as another job.

[00:03:35] Everybody has a different way that they're paid.

[00:03:38] And so we've sort of broken it down into, into categories.

[00:03:41] So, um, I'm going to back it up.

[00:03:44] I'm going to back it for one second.

[00:03:45] You're going to back it up. Okay.

[00:03:46] I'm just going to back it up because we, we tend to break documents down into a few different categories.

[00:03:51] So three main categories that we want to, to kind of look at and kind of break it down into.

[00:03:57] Number one is income documents.

[00:03:59] Like Mindy said, number two is the down payment documents.

[00:04:03] So where's the money coming from for the down payment?

[00:04:06] And number three is real estate documents.

[00:04:09] So this is anything to do with the property or properties that are in question.

[00:04:13] So those are the three main categories.

[00:04:15] And if you stay tuned to the end, we're actually going to talk about a few other kind of peripheral categories that we might actually ask documents on as well.

[00:04:24] But Mindy go on with income.

[00:04:26] Yeah.

[00:04:27] So I was going to say, typically people listen to podcasts when they're driving.

[00:04:30] So if you're not, if you're sitting and listening, get out a pen and paper, because this is the time to take some notes.

[00:04:37] So you are, if you are an employee, employed employee, you are either going to get an hourly wage.

[00:04:45] You're going to get hourly with some overtime or bonus.

[00:04:49] You're going to get a salary or you're going to get a salary with bonus, or you're going to have a contract.

[00:04:56] So each of these scenarios, slightly different documents.

[00:05:00] Here we go.

[00:05:02] Hourly wage.

[00:05:03] We will need to see a job letter from your employer and a recent pay stub.

[00:05:10] That's it.

[00:05:12] That easy.

[00:05:14] Yeah.

[00:05:14] Your job letter should indicate the position that you have, your start date, your number of hours that you work per week.

[00:05:24] And they should be a guaranteed number of hours and the hourly wage and your prospects for continued employment.

[00:05:32] Some job letters might also include your wages to date per year.

[00:05:36] Some might say your wages were this last year, but really it's going to be those four things that will form the job letter.

[00:05:44] Should be on your employer's letter, I guess the letterhead.

[00:05:49] Yeah, that's the right word.

[00:05:50] On the letterhead and should be signed by either a manager or HR person.

[00:05:57] And dated within the past 30 days.

[00:06:00] Also very important.

[00:06:01] We don't want to see your offer of employment from two years ago.

[00:06:06] How do we know you're still working there?

[00:06:08] True.

[00:06:08] True.

[00:06:09] Pay stubs, just like they sound, a pay stub is the thing that you would get as part of your, most people get them biweekly.

[00:06:17] It'll say your name.

[00:06:19] It'll have the wage, probably the number of hours that you worked, deductions and all this stuff, and your net earnings at the end.

[00:06:26] And again, pay stub, recent, dated within 30 days.

[00:06:29] So that's sort of typical for these income verification.

[00:06:32] When we start looking at any amounts over just a basic hourly wage or a basic salary.

[00:06:39] So when we're talking about overtime income or bonus income, in that case, we need to actually look retroactively at a two year average.

[00:06:51] So the lender wants to see that this extra income isn't a one off.

[00:06:56] It's something that's going to continue.

[00:06:58] And the only way to do that is to make sure that it's been consistent in the past.

[00:07:03] So in that case, again, we want the job letter and the pay stub to confirm your base income.

[00:07:09] And then we're going to need a two year average of your past two T4s or your T1 generals and notice of assessments from CRA.

[00:07:21] So a little bit more documentation, but very important to be able to use that extra income.

[00:07:26] Exactly. So that might come into play if you have or if you're running up into close to being at the maximum debt servicing for your mortgage, or if you're looking to buy a bigger house with a larger mortgage.

[00:07:40] Oftentimes we will have to look back at the last couple of years in order to be able to qualify.

[00:07:45] Because as we've talked about before, house prices have gotten quite high.

[00:07:50] Absolutely.

[00:07:52] So salary, Mindy mentioned this very similar to hourly with the salary.

[00:07:57] We're simply looking for a job letter and a pay stub, just as we would have with the hourly wage.

[00:08:04] Similar again, the salary with bonus, very similar to hourly with overtime.

[00:08:09] So we're going to take those two things, the job letter pay stub, plus the average of the last couple of years, either T4s or T1 generals.

[00:08:17] That's your tax return and your notice of assessment.

[00:08:22] So moving into contract income, which I guess, you know, it's kind of leading into the self-employed income.

[00:08:31] Yeah, like somewhere between employed and self-employed.

[00:08:33] So unfortunately, with contract income, lenders can look at it differently.

[00:08:38] Again, if it's a new contract, they won't really like that because they want to make sure that it's going to continue.

[00:08:46] Most contracts say on their end date of X and then it's like, oh, cool.

[00:08:52] So the mortgage goes for five years, the contract ends in one year.

[00:08:56] So how do we know you're going to keep getting paid?

[00:08:58] Right.

[00:08:59] So this is why we need to start providing more documentation.

[00:09:03] That's right.

[00:09:04] Again, typically in the form of what's happened in the past couple of years.

[00:09:08] Yep, exactly.

[00:09:09] And that's really the thing is when it comes to contract income and Mindy alluded to this, it's very similar to being self-employed, which we'll touch on just in a little bit.

[00:09:18] But contractors, if you can show consistency over the years, like I keep getting the contract year over year, that's a okay.

[00:09:27] We just have to be able to show that.

[00:09:28] And of course, we'd want to see the contract.

[00:09:33] So let's move on to self-employed individuals because there are a ton of self-employed individuals.

[00:09:40] I'm going to break this down into three categories for self-employed.

[00:09:44] So you're either a sole proprietor, you're potentially a partner in a partnership, or you own your own corporation or you're a shareholder in a corp.

[00:09:56] That's the three broad categories.

[00:09:58] Really, the first two, sole proprietor and partnership are dealt with the same.

[00:10:01] And how do we deal with those?

[00:10:02] Or how do the lenders want to see the income?

[00:10:04] Yeah, so sole proprietor or partnership.

[00:10:07] So you're not incorporated.

[00:10:09] So you haven't formed a separate entity.

[00:10:12] You're still yourself as far as taxes go.

[00:10:15] So you're still claiming your gross income on your personal tax returns.

[00:10:19] So in that case, we're looking retroactively.

[00:10:24] We're looking at that two year average.

[00:10:25] So a self-employed client who is a sole proprietor or in part of a partnership, the lender will ask for your pass to T1 generals supported by your pass to CRA notice of assessments.

[00:10:43] Ideally, we like to see that number consistent or increasing.

[00:10:49] If it looks like it's decreasing, then the lender will typically use the lower, more recent number for your income.

[00:11:00] Exactly.

[00:11:01] And the most important thing about that T1 general when it comes to being self-employed is that the T1 general should include the statement of business activities.

[00:11:11] That's the actual breakdown of your revenues and expenses and your net income.

[00:11:17] That's the number that flows through to your actual income figure.

[00:11:22] And sometimes we get the T1 summary, which will not include the statement of business activities.

[00:11:30] So please.

[00:11:31] We don't want it.

[00:11:32] We don't want the summary.

[00:11:33] The bank doesn't want it.

[00:11:35] No one wants the summary.

[00:11:36] I think it's only the accountants that will send you the summary.

[00:11:39] Yeah, accountants love the summary.

[00:11:40] But no one else does.

[00:11:42] So full thing, statement of business activities.

[00:11:45] You'll see it.

[00:11:45] It's got the heading right up on top.

[00:11:48] All right.

[00:11:49] So we talked about those first two categories.

[00:11:51] Now the incorporated side.

[00:11:53] So on the incorporated side, things get a little bit more complex because an incorporation or a corporation is its own separate legal entity.

[00:12:01] So typically what would happen is either one person or two people, maybe typically spouses would form a corporation in which they would then operate this business.

[00:12:14] We need to do a few things.

[00:12:15] Number one, we need to tie you to that corporation.

[00:12:17] So an incorporation package that would include the certificate of incorporation, a list of shareholders and the register of directors.

[00:12:25] That tells us who you are and that you own the corporation or you own the shares of the corp.

[00:12:31] And it gives us a sense of the legality of that corp.

[00:12:34] And then, then come the income documents because we would want to see the tax returns.

[00:12:40] So typically again, two years tax returns and on your tax returns, typically we'd want to see those T slips.

[00:12:47] So if you're being paid an employment wage by your own corp, you'd get a T4.

[00:12:52] If you're drawing dividends, then you'd receive a T5.

[00:12:56] But typically we'll want to see all that.

[00:12:58] And lastly, the notice of assessment to confirm that no taxes are owing.

[00:13:05] Yes, that is important.

[00:13:07] Lenders want to see that CRA has been paid because CRA has a lot of rights in Canada.

[00:13:15] So we have to make sure they're paid and they're happy.

[00:13:19] Yeah.

[00:13:20] All right.

[00:13:21] We've got one last category of income.

[00:13:23] Well, I guess there's kind of two, but one last category of the main parts of incomes that we'll typically see, which in this case is retirement income.

[00:13:31] Yeah. So in Canada, once you're retired, you are entitled to CPP, Canada Pension Plan and OAS, old age security.

[00:13:42] In order to prove to the lender that you're earning that income, we need to see your T slip from the preceding year and three months bank statements showing that you're still, in fact, collecting those amounts.

[00:13:56] And quite often these payment amounts do change.

[00:14:00] So they want to see what you're earning currently, not necessarily what you earned last year, which makes sense because you're currently applying for the mortgage.

[00:14:08] Um, there's some lucky folks out there that earn a pension in addition to CPP and OAS.

[00:14:15] So same sort of idea as with the others.

[00:14:19] Uh, we want to see, um, the T slip showing the amount you earned.

[00:14:24] Um, sometimes there'll be like a letter or a statement from the pen, the company that you get your pension from.

[00:14:30] And then also the three month bank statements showing those deposits currently going into your bank account.

[00:14:37] Right.

[00:14:39] And the last place that typically people would draw a pension or a retirement income from is either from their RRSP or RRIF withdrawals.

[00:14:51] And on those ones are kind of unique because these ones get drawn down.

[00:14:56] So what typically the lenders will look for is a two year average of the amounts that were drawn and we can prove those by the T1 general.

[00:15:04] So again, we're going to request two years of tax returns.

[00:15:07] Uh, typically you'll also get T slips showing that you withdrawn those amounts from either your RRSP or your RRIF.

[00:15:14] So the T slips as well.

[00:15:16] And lastly, typically we want to see, uh, an investment statement that shows how much is left in your investment account.

[00:15:26] Lenders will typically want to see that there's enough in that investment account to cover at least the term of the mortgage.

[00:15:32] So if you draw $10,000 per year and you're looking for a five year mortgage, typically they'll want to see at least $50,000 in that RRSP or RRIF account.

[00:15:44] Yeah. Especially if you need that income in order to qualify for the mortgage.

[00:15:49] Yeah.

[00:15:50] Yep.

[00:15:50] And I did tease that there's one more potential income source, which is Mindy.

[00:15:56] Yeah.

[00:15:57] So not your standard, um, employment style of income, but it is a verifiable, uh, income used for mortgage qualification and that's from income from rental properties.

[00:16:07] Right.

[00:16:08] So whether this is a suite in a house or a rental property you're purchasing or a, you're purchasing your own home, but you have a secondary rental property.

[00:16:21] Uh, we do need to show the rental income that we're saying on the application that you collect.

[00:16:27] So there's sort of three broad ways of doing this.

[00:16:31] Do you want to take it away, Pete?

[00:16:34] No, no, you're the rental queen.

[00:16:37] I'm going to leave it to you.

[00:16:38] Okay.

[00:16:38] Okay.

[00:16:39] So if you are not buying a subject rental property, you already have rental properties.

[00:16:45] You need to be claiming that income on your T1 generals.

[00:16:49] This is important because more and more lenders are relying on using your T1 generals to support your rental income claim, including if you're doing short term rentals.

[00:17:02] A couple of years ago, lenders were like, Nope, not using short term rent rental income at all.

[00:17:07] Now they're saying, well, show me the T1 general.

[00:17:10] So this is a good thing.

[00:17:12] So number one, it would be your T1 generals and your CRA notice of assessment showing the amount of rental income you claimed.

[00:17:21] That is a good gold standard.

[00:17:24] Can I, can I intersperse here?

[00:17:26] I will say one thing.

[00:17:27] Yeah.

[00:17:28] I know you're the queen of this, but in that T1 general, like we talked about on self-employed income, there's a special section that actually has the statement of rental income.

[00:17:38] Make sure again, we want to see that full T1 general.

[00:17:41] So we include that statement of rental income because that will actually detail out how much you collected, what the property address is and all that stuff.

[00:17:50] So make sure you're very specific about that.

[00:17:52] Yeah.

[00:17:53] And I, I'd say for all T1 generals, we need every single page.

[00:18:00] Do not leave a page out.

[00:18:01] That's just, yeah.

[00:18:03] Every single page that goes to CRA, we need to see.

[00:18:05] Yeah.

[00:18:07] So another way to verify it is again, assuming you already have this rental property is to provide a lease agreement and support those lease payments with three months bank statements.

[00:18:21] Um, so this kind of used to be the gold standard, but again, lenders are more moving towards looking at the T1 generals to support the rental income.

[00:18:31] But this way does work as well for some lenders.

[00:18:35] So now what about if you're buying a rental property that you've never rented before?

[00:18:40] So you're not going to have a lease agreement and the rental income is not going to be on your tax returns.

[00:18:45] What do you do then?

[00:18:46] Well, in that case, we get an appraiser to determine the economic rents of the property.

[00:18:54] So the appraiser writes up a letter of economic rents and the lender will use that information to help support the rental income that we're saying you will make.

[00:19:05] I have to come clean.

[00:19:07] The reason I said no to, to answering these questions is because I was looking up our series on rentals and mortgages.

[00:19:15] And so I actually was using my fingers to do something else.

[00:19:19] Episode number 34, episode 35 and episode 36.

[00:19:23] If you want to listen to our episodes on rentals and mortgages and get a little bit more detail on how rentals can be done, have a listen to those.

[00:19:34] Or send me an email or give me a call.

[00:19:36] This is true.

[00:19:38] All right.

[00:19:39] So we've talked a little bit about income and hopefully if you're still with us, you are absolutely committed to this episode.

[00:19:45] So we're going to talk about down payment.

[00:19:47] We're going to get into how do we verify the down payment?

[00:19:50] Typically when we buy a house, we have to put some skin in the game.

[00:19:54] So how do we determine and how are lenders going to look at the amount of skin that we're putting into the game?

[00:20:01] And that on a purchase would be a down payment.

[00:20:06] Yes.

[00:20:07] And sometimes the down payment is actually the limiting factor, not the income.

[00:20:12] So there are minimum down payment requirements.

[00:20:14] And if you don't have quite enough money to buy the house that your income qualifies you for, then it's actually your down payment amount that will reduce your qualification.

[00:20:24] But regardless, we need to prove once again to the lender that you have this money and it's your money.

[00:20:31] So we break it down into three different or I guess two different kinds of transactions.

[00:20:37] One being a purchase and the other transaction would be a refinance or a switch.

[00:20:42] So take it away, Pete, on the purchase side.

[00:20:46] Okay.

[00:20:47] And I do have to say that having a picture of, you know, like a bag full of cash will not work.

[00:20:55] Lenders don't tend to be into unverifiable things.

[00:21:00] So even though it might seem verifiable to you and you can see it, lenders have a certain requirement for documentation.

[00:21:07] So on a purchase, if you're buying a property, we typically will ask for three months of statements for the account from which your down payment sits in.

[00:21:20] So that could be a savings account.

[00:21:22] Actually, it could even be a checking account.

[00:21:24] It can be a TFSA.

[00:21:26] It could be the first home savings account.

[00:21:30] It can be an RRSP if you're going to use the home buyer's plan.

[00:21:34] There are many ways to confirm this and there's many different statements, but lenders will want to see a three month continuous statement.

[00:21:44] They appear different ways, but that's what they're looking for.

[00:21:49] And I'll just point out that all account statements must have your name and account number on them.

[00:21:56] So quite often they'll send statements from like June, July and August, but then for September, they don't have the statement yet.

[00:22:03] So in that case, they'll send a screenshot, which is fine.

[00:22:07] Just make sure that screenshot has at least your account number in there so that we can cross reference that screenshot to the previous account statements you sent.

[00:22:17] Exactly.

[00:22:18] And that's, I think one of the most important things about these statements, like Mindy said is screenshots tend not to show everything.

[00:22:27] So if you can find, if you're on a, an online app, or if you're going to your online banking, or if you're on something in which you get these statements, look for the PDF download.

[00:22:39] Cause that download typically will have the entire statement.

[00:22:42] It'll have all the details that we want.

[00:22:45] So name dates, account details, it has the whole thing.

[00:22:49] And that's really what we want to get.

[00:22:51] But that also brings us to an interesting point with regard to these down payments and that they should show a steady accumulation of funds.

[00:22:59] If there are large deposits that somehow fall outside of what the lender would see as a typical accumulation.

[00:23:08] So if I earn $2,000 every two weeks, and all of a sudden there's a $5,000 deposit that doesn't necessarily compute with what the lender would kind of understand is then the regular flow of funds into your account.

[00:23:23] So they'll typically want to have explanations on any unusual or larger deposits.

[00:23:31] Yeah.

[00:23:32] And explanation being proof.

[00:23:35] So if you sold a litter of puppies, we will need to see those receipts, which has actually happened in the past.

[00:23:44] It has.

[00:23:44] So there you go.

[00:23:45] And down payments can come from many different places.

[00:23:48] They can be from puppies.

[00:23:49] They can be from selling things on marketplace.

[00:23:52] They can be from selling a car, selling a house.

[00:23:57] There are so many ways to do this.

[00:23:59] So just remember, keep all your documents.

[00:24:02] And even if you have, if you're selling something on marketplace, like having a screenshot of that marketplace listing certainly helps.

[00:24:10] Typically lenders will want to see the funds in Canadian accounts.

[00:24:14] We are dealing here in Canadian mortgages.

[00:24:16] So if the funds are external to Canada, somewhere perhaps in the States or Australia or wherever else in the world, please connect with us because lenders vary on what they require for foreign funds.

[00:24:31] So just give us a quick shout or send us an email and we'll be able to tell you where that's at.

[00:24:36] Lastly, I want to talk about cryptocurrency because this is becoming more popular today.

[00:24:42] Cryptocurrency is a tough one for down payment because crypto fluctuates so much and it's not like it has a set time during the day like the markets do where nine till four markets are active.

[00:24:57] Crypto is moving around every day, all day, all the time.

[00:25:01] So be very careful if you've got funds in a crypto account.

[00:25:06] Again, connect with your broker, connect with us.

[00:25:08] There are, there's typically a requirement for those funds to be moved into a little bit more of a stable account.

[00:25:15] So it could be in the, in the wallet account, but they should be moved into something that has almost no fluctuations.

[00:25:23] And that typically will be 30 days prior to when the funds are required.

[00:25:28] So be very cognizant of those.

[00:25:31] Ask if you have any questions.

[00:25:34] Yes. Good points.

[00:25:38] Okay.

[00:25:38] So that's for a purchase.

[00:25:40] So now if we're doing a refinance, you know, you're thinking, well, I'm just refinancing my mortgage.

[00:25:45] I don't need a down payment.

[00:25:46] And you're right.

[00:25:46] No, we're not asking to see your bank statements to see how much money you have saved for this refinance.

[00:25:52] Your down payment is the equity that you have in your home.

[00:25:55] So this determines your loan to value.

[00:25:58] And in more recent years, this kind of helps us negotiate your interest rate a little bit.

[00:26:03] You know, typically the larger your equity position, once you're in that sort of conventional space, the lower your interest rate.

[00:26:10] That's information for another podcast, but that's why it matters.

[00:26:16] So just like lenders need to verify your cash or I don't even want to use the word cash because cash is not a good thing nowadays, but they want to verify your down payment for a purchase.

[00:26:28] They want to verify your equity in your home for a refinance.

[00:26:33] So how do they do that?

[00:26:35] They're going to ask to see a current mortgage statement.

[00:26:39] So again, most mortgage statements are issued at the end of the year, usually in January of the year that you're going to be applying.

[00:26:47] So they'll want that statement as well as a more recent, again, I'm going to say screenshot, but whether you can download a PDF, it just, you have to make sure again, it includes the mortgage information, the property it's attached to the balance, the payments.

[00:27:05] As well as they're going to be attached to the balance.

[00:27:09] So in some cases, we can use the assessed value.

[00:27:16] So this would be your, for example, in British Columbia, your BC assessment assessed value that they use for calculating your property taxes.

[00:27:25] It's really nice when we can use that because there's no extra expense.

[00:27:30] Um, in some cases, the lender will ask for an appraisal.

[00:27:35] So an appraisal is asking a third party to do evaluation, provide more details, um, and there is a cost to the client, um, to do this with a refinance.

[00:27:48] Absolutely.

[00:27:48] And if you go way back in our playlist to episode one, we actually talked to, uh, the, the,

[00:27:55] one of the deputy assessors at BC assessment.

[00:27:58] And if you're ever curious about how they draw their values, have a listen to that episode.

[00:28:03] Yeah.

[00:28:04] So that's the down payment side then, or the equity side.

[00:28:07] We're trying to figure out how to determine those, um, pretty, pretty straightforward.

[00:28:13] And lastly, we're going to talk about a little bit of the real estate side.

[00:28:19] And a lot of this kind of refers to buying a property, but some of it can also refer to redoing an existing mortgage.

[00:28:28] So if you're going to refinance to draw out equity, or you're going to move your mortgage from one lender to another, there are some real estate documents that we will require and ask for.

[00:28:39] Yeah.

[00:28:40] So this is the time where you're not getting analyzed.

[00:28:43] Your bank accounts aren't getting looked at your income documents.

[00:28:46] It's the property that's being analyzed, the property that's being reviewed because that is part of the transaction.

[00:28:51] Um, so in a purchase, we'll start with just a typical purchase transaction.

[00:28:56] The number one most important thing that we're going to get is going to be the signed purchase agreement signed by the seller and the buyer.

[00:29:05] Um, we typically get this from the realtor, which is nice.

[00:29:09] One last document for the clients to send us.

[00:29:12] Um, in addition to the purchase agreement, we like to see the MLS listing, but not just the one that you or I can access online.

[00:29:21] We actually need a PDF of the realtor's version of the MLS listing.

[00:29:28] That one includes the information that the lender is wanting to see.

[00:29:34] And the third document for all purchases, again, this is in BC, uh, that the realtor will typically send us is the property disclosure statement.

[00:29:44] Um, so yeah, so those are sort of the three that we like to get as soon as we hear that there's a fully signed, uh, purchase application ready to go.

[00:29:53] So those documents that many just talked about, they are like the complete dictionary for your property.

[00:30:03] They tell us everything about the property.

[00:30:05] They'll tell us date.

[00:30:07] It was built the size, the size of the lot.

[00:30:10] If it has a garage, what the purchase date is, what the closing date is.

[00:30:16] Oh, I give you a thumbs up on there.

[00:30:17] Uh, what, what the various dates are and part of this transaction.

[00:30:21] And so everything in those documents, we actually read through and we use to filter into that application and use it to, uh, create the thing that the lenders require.

[00:30:35] So very important to have those documents.

[00:30:38] Yep.

[00:30:40] And then there's some overlap.

[00:30:43] So purchase and refinance now, cause there's a few different documents that we need for refinance.

[00:30:50] So sometimes with a purchase, we will need to see a property tax notice.

[00:30:55] Um, sometimes realtors don't put the property taxes in the MLS listing, which is not ideal, but when that's the case, then we will need a property tax notice for all refinances.

[00:31:08] And switches, we need one regardless.

[00:31:12] Um, just a quick note on that.

[00:31:14] Yeah.

[00:31:15] If, if you're buying a property and the taxes are not stated on that MLS listing, then typically you will request this property tax notice.

[00:31:26] Cause obviously you don't own the property.

[00:31:28] So you don't have the property tax notice.

[00:31:30] You'd request that from your realtor.

[00:31:32] The realtor is able to, to gather that information and get it from the listing or the selling realtor.

[00:31:37] Yeah.

[00:31:38] Yeah.

[00:31:39] And quite often clients don't know that they don't even realize that they're entitled to that information.

[00:31:46] Um, so what about, what about if you're purchasing a condo, a condo is a little bit different than purchasing a home.

[00:31:53] Mm hmm.

[00:31:53] Why is that?

[00:31:54] Or even a refinance of a condo?

[00:31:56] Well, a condo isn't freehold.

[00:31:59] It's strata.

[00:32:00] There's a bit of a shared interest to there.

[00:32:03] So if you are, if the property in question is a condo, um, we 100% will need to verify your condo fees.

[00:32:12] Uh, this can be, there's various documents strata form B.

[00:32:16] I mean, I don't want to get too technical here, but that's something that will be requested.

[00:32:20] And again, your realtor should provide that in a purchase, or if you already own it, you should have record of the condo fees you're paying, uh, in a purchase.

[00:32:29] They may ask for the strata budget, a depreciation report, council minutes.

[00:32:35] It all depends on how the lender views the subject property.

[00:32:41] Um, if there's like some sort of a red flag that's showing up, um, they'll just keep asking questions and asking for information until they feel like they can sign off on the property.

[00:32:53] Right.

[00:32:53] And these are documents that even though they're being requested by the lender and we will ask for them, there's stuff that you should probably also be very much aware of, and you should probably read them because if there are any unknown or perhaps lesser known problems with the property, for instance, if they have to replace the roof, then those things will be disclosed in either the budget or the depreciation report or the minutes.

[00:33:21] And so have a read through those, understand what you're getting into.

[00:33:25] So, you know, that there, there may or may not be, uh, expenses coming up that may actually have to come out of your pocket.

[00:33:35] Yep.

[00:33:35] Absolutely.

[00:33:35] Good point.

[00:33:37] Um, and then, you know, there's different unique properties.

[00:33:41] I mean, not all properties are the same, just like not all people are the same.

[00:33:46] So what if you have a well, what if you're not on city sewer?

[00:33:51] What if it's a brand new build?

[00:33:53] What kinds of documents then?

[00:33:56] Mm hmm.

[00:33:56] So in any one of those cases, there could be special reports or special inspection reports or certificates that are required.

[00:34:06] Uh, please just check with your broker on these things.

[00:34:09] Uh, sometimes the realtor will know, sometimes your broker will know, but if there is something unique about that property, uh, chances are they may, the lender may ask for further information.

[00:34:21] Yep.

[00:34:22] Yep.

[00:34:22] And then if the BC assessment value or other assessment value will not be accepted for the property valuation and appraisal will be required.

[00:34:32] It's the ultimate verification of value as well as all those other property details.

[00:34:39] Sometimes if it's a CMHC insured mortgage, CMHC will cover the cost.

[00:34:44] If not, it's typically the lender that will cover the cost.

[00:34:48] Um, and then there's one other type of a transaction.

[00:34:52] We call this the switch.

[00:34:53] Um, this is when we're moving you from lender A to lender B and basically all details of your mortgage are staying the same.

[00:35:00] Typically people do this to get a better rate than their existing lender lender is offering them.

[00:35:04] Um, so in a switch, the, what makes it less costly is that no external solicitor is required.

[00:35:12] Um, but that means that like Pete and I have a little bit more work to do.

[00:35:16] So there's a few more documents that we have to ask for upfront.

[00:35:20] Um, home insurance policy is important.

[00:35:23] Um, in the other transactions, your lawyer would request that of you in a switch.

[00:35:29] We are asking that of you, um, definitely need the property tax notice and we will definitely, definitely need a void check to show where your mortgage payments are coming from.

[00:35:39] So.

[00:35:40] Perfect.

[00:35:42] All right.

[00:35:42] You've made it almost to the end.

[00:35:44] We have a few random documents that sometimes come up and in various situations,

[00:35:51] we see these things come up because they are requested by the lenders.

[00:35:58] And for very specific purposes, I'm going to talk about the very first one, which is when people are separating or getting divorced or are separated or are divorced.

[00:36:10] Lenders will always ask for a separation agreement.

[00:36:14] Uh, they require this to determine whether or not there's any sort of ongoing obligations between the lenders.

[00:36:20] Between the spouses.

[00:36:22] So that could be an ongoing obligation or spousal support.

[00:36:25] It could be an ongoing obligation for child support.

[00:36:29] It could also be that if a separation is fairly new, that the, uh, amounts being paid out could be required from one spouse to the other.

[00:36:40] So one spouse may pay, may have to pay a certain set amount, say $50,000 to the other.

[00:36:45] So there are a number of details that are, uh, determined in that separation agreement.

[00:36:51] So make sure you have that.

[00:36:53] If you've ever been, uh, separated or divorced, make sure those documents are kept handy and at least in a spot where you know where you can access them.

[00:37:02] Um, and I, one thing that I, we probably should have mentioned at the beginning is that everything that you send us is strictly confidential.

[00:37:11] This goes from us to the lender and it only goes to the lender if the lender specifically requests it.

[00:37:18] I know that in some cases, a separation agreement, for example, um, you know, it is, it's not a comfortable document to share, but it is required for mortgage lending.

[00:37:30] Um, we are not sharing it anywhere.

[00:37:32] We are just looking at it just to get the facts and the numbers.

[00:37:37] So.

[00:37:38] Exactly.

[00:37:38] And, uh, if you want to listen to an episode that we did, uh, with Christina Vintners, that was episode 27.

[00:37:46] So you can go back and listen to that.

[00:37:48] If you have any questions on how separations and mortgages work.

[00:37:52] Uh, we've got a couple other random documents.

[00:37:55] Yeah.

[00:37:56] So lately, um, there's been a few sort of shifts in how much, uh, I guess the know your client,

[00:38:04] anti money laundering, all these different things that we're now being put on our shoulders as mortgage brokers.

[00:38:09] So something that we are going to be asking for on every transaction is your ID.

[00:38:13] Uh, we need to verify you are who you say you are, which helps keep all of us safe.

[00:38:19] Um, so expect to be asked that this is going to be photo ID, passport, driver's license,

[00:38:24] uh, we may ask for additional ID to verify the details.

[00:38:30] Um, another aspect of that is residency status.

[00:38:33] Um, there's all different kinds of mortgage programs for, uh, new to Canada, uh, foreign, um, uh, permanent residency or, uh, short.

[00:38:45] Like there's just all these different sort of unique mortgage products that exist.

[00:38:50] Um, and so as that, we would need to see your residency status, um, whether you have your permanent residency or, or what it may, whatever it may be.

[00:38:58] I should say that maybe now's a good time.

[00:39:00] If you have your wallet or your ID with you check to ensure that it is still valid.

[00:39:08] Lenders will not accept expired ID.

[00:39:11] So check your ID right now, make sure that it is still valid because oftentimes, uh, we just don't know when it expires.

[00:39:19] We don't ever typically look at our own ID.

[00:39:21] So use this time to, to quickly do that.

[00:39:25] And, and that's a wrap.

[00:39:27] Uh, I should say on one final note that the list that we talked about here is not necessarily an exhaustive list.

[00:39:36] Every person's scenario can be a slight bit different.

[00:39:39] We may require more than what we've already talked about, uh, depending on what the lender asked for or that various, uh, particular scenario.

[00:39:49] But this is a really good start.

[00:39:51] If you can have these things ready for your broker, number one, you're going to be an absolute rock star in our books.

[00:39:59] Uh, and number two, you're going to make this process go so much smoother because this is about 99% of what lenders ask for.

[00:40:07] You'll be ready.

[00:40:09] Yes. Thank you for listening.

[00:40:11] I know it's, it's a lot of information today.

[00:40:14] Uh, but hopefully it will help shed some light on why we're asking for the things that we're asking for.

[00:40:20] Um, yeah.

[00:40:22] And it will help make the mortgage application process and approval process.

[00:40:27] So easy breezy.

[00:40:30] Exactly.

[00:40:30] Come back and listen.

[00:40:31] Bye.

[00:40:32] This is the mortgage life.

[00:40:34] We look forward to continuing the conversation.

[00:40:36] So come back and listen.