🙋🏻♀️Everything You Need To Know About Completing A Mortgage Application👩🏻💻
As the name implies, the application is an online form that you complete when you are applying for a mortgage. It’s basically a collection of information, which gives the lender a snapshot of your financial picture. Most of the application will be self-explanatory. I don’t need to tell you out to fill out your name and date of birth for example. There may however be some items that require a bit more explanation. By having a better understanding of the application requirements, it can make this part of the process that much easier.
My goal is to answer any questions that you might have about the application in this blog. The easier I can make it on you, the better your experience with the application. This can also help eliminate any back and forth emails asking for clarification, improving your chances of nailing the application perfectly the first time. If you still have questions, we’re still delighted to answer them for you of course!
I’ll start of by going through the different components of the application, so you’ll know exactly what to expect when completing the form.
Mortgage Application Components
There are eight main components to a mortgage application:
- Personal details
- Properties currently owned (if applicable)
- Existing mortgages (if applicable)
- Subject property info
- Requested mortgage
This is self-explanatory for the most part. Name, date of birth, address, etc. There are however a few areas that I want to touch on:
Social Insurance Number (SIN)
All mortgage applications will ask you to fill in your SIN. This is optional, however providing us with your SIN can improve accuracy when we pull your credit bureau. In most cases, the credit bureau comes back complete either way, but leaving out the SIN can sometimes result in missing information.
If you have a common name such as John Smith, or Sara Wong, then I would strongly recommend that you provide your SIN. I’m just using these names as examples, so if your name happens to be John Smith or Sara Wong, then that’s purely coincidental! While your date of birth and address will be used to pull your credit, common names can still result in inaccurate credit bureaus, which can lead to more back and forth between you and your broker. It can also create complications with your file, although rare.
For security reasons, I never recommend putting your SIN in an email. Always provide it through our secure, online application, or provide it to us over the phone.
Mortgage lenders require a full three years of address history. If you’ve lived at your current residence for less than three years, then you’ll need to add your previous address as well. If you move frequently, then you may need to provide multiple previous addresses to ensure the full three years are covered.
If your previous address was in another country, then enter your address from that country. Our system will still ask you for your province. Just select one of the provinces as this is a required field. For postal code, you can just enter X1X 1X1 to bypass this requirement.
Just as with your living history, a full three years of employment is required. If you’ve been at your current job for less than three years, then you’ll need to provide your previous employment. Again, a full three years is required, so you may need to add multiple previous employers if you’ve changed jobs more than once in the last few years.
If you’re recently out of school and do not have a full three year history, then you can indicate that you were previously a student.
If you are new to Canada, then you can provide your previous employment info from your previous country to complete the three year history.
If you’re a homemaker, then just list your employer as ‘Homemaker’, and complete with your home address and phone number. For income, you can enter $1.00.
This will give the lender an idea of what you currently own. You’ll want to include any RRSPs, TFSAs, savings / chequing accounts, investments, vehicles owned, etc.
Our system will provide you with a drop down list with the type of assets to choose from. Note that you will not need to provide household goods or life insurance, even though they are listed as options.
Chequing accounts will fall under the same category of savings. There is no option for TFSA, so you can just select savings, and state that it’s a TFSA under ‘additional details’.
For each asset, the approximate value will be required. Note that this does not have to be accurate to the penny, as balances can fluctuate daily. Investment balances can change with each passing second. For this reason, I recommend rounding to the nearest $1,000.
For any vehicles owned, enter the approximate value. If you aren’t sure, a reasonable estimate is fine. If have no clue, then you could always do a search for your vehicle on www.trader.ca can use a median value from there. This is one area that is not super important that you’re bang on accurate.
Our system will then ask you for details on the asset. Please state the name of the institution the account is with. For any vehicles owned, please enter the year, make and model in this field.
This is a list of any outstanding loans, current credit card balances, leases, etc. This information will also be collected when we check your credit, however we ask for you to provide this information as well. There can be times when a specific loan may not be reporting on your credit bureau. Or it may report on your Transunion report, but not on your Equifax. This can result in an inaccurate preapproval, which we want to avoid.
For credit cards, our system will ask you for the monthly payment and maturity date, which you can leave blank. If you pay your card off in full each month, then you do not need to list it here.
Properties Currently Owned
If you own property now, then please ensure this section is completed, even if you’ll be selling. The information required is as follows:
- Full address
- Approximate market value
- Original purchase price
- Original purchase date (the date you took ownership of the property).
- Annual property taxes
- Condo fee (if applicable)
You’ll want to ensure that all the fields are completed, which saves us from having to come back to you asking for the additional information. This can eliminate some back and forth, which helps us to provide you with a better experience.
In the same section you can enter the information for any outstanding mortgages on the properties you currently own. Even if you’ll be paying out the mortgage, the following information is still required:
- Mortgage type
- Current balance owing
- Payment amount (not including property tax)
- Payment frequency
- Maturity date (renewal date)
- Rate type (fixed or variable)
- Term type (open or closed)
- Mortgage lender
- Interest rate
- Original mortgage amount
Most items on the list are self-explanatory, however there are a couple of points that you may not be sure of. Mortgage type will almost always be a first mortgage. The only time you would select second mortgage would be if you had more than one mortgage on the same property. If you’re like most people and only have one mortgage on your property, then you would indicate it as ‘first’. If you have multiple properties with a single mortgage on each, then you’d select ‘first mortgage’ for each one.
Term type is referring to whether your mortgage is open or closed. The vast majority of mortgages are closed terms, meaning a penalty would be applied if you broke the mortgage early. Open mortgages are quite rare as rates are extremely high by comparison. Almost always, your mortgage will be closed.
Subject Property Information
The property you require the new mortgage for is referred to as the subject property. The information required will be as follows:
- Full address
- Construction type (New if buying a new build home, or existing if buying a resale)
- Property type (detached, semi-detached, high rise apartment, etc).
- Living space (approximate square footage above ground)
- Lot size
- Heating type (forced air, electric baseboard, etc)
- Number of units
- Style (two story, bungalow, split level, etc).
- Age of property
- Garage size (single, double, triple, if applicable)
- Water and Sewage (Municipal, well and septic, etc)
- Annual property taxes and year
- Condo fee (if applicable)
- Purchase price or estimated market value
- Closing date
If you are purchasing a resale property, most of this information can be taken from the MLS listing, or you can request from your realtor. If buying a new build, then your builder would be able to provide you with any information that you aren’t sure of.
With new builds, the property would not yet be assessed for taxes, so 1% of the purchase price can be entered for property taxes. This is what most lenders will use for qualification.
Our system refers to this as ‘mortgage details’. This is where you’ll enter your down payment amount, as well as the source of your down payment. If there is multiple sources then our system will give you the option to add them. If you’re refinancing or switching an existing mortgage to a new lender, then the source of your down payment will be ‘existing equity’.
Anything remaining such as mortgage rate, amortization, etc, can be completed from our end. We’ll of course verify your choice of mortgage product prior to submitting to a lender for approval.
What Must Be Accurate And What Can Be Estimated
Accuracy on a mortgage application is super important, however there are some items that can be estimated. Balances on bank or investment accounts, credit cards, etc, can fluctuate daily, or even hourly. For that reason, these can be rounded to the closest $1,000, as I mentioned above. What you don’t want to do is guess an amount. For example, don’t guess that you have $100,000 in your RRSP, when you really only have $80,000.
Other points that can be estimated are current property value and value of vehicles owned.
Pretty much everything else on the application should be bang on accurate to the penny. Don’t say your income is $70,000 when it’s actually $69,000 for example.
We’re still going to review your application and ensure the information you provided is supported by documents, and may make changes where necessary. Accurate applications lead to smooth mortgage transactions, and better client experiences, so we’ll ensure everything is perfect before we submit your file through to a lender for approval.
The majority of the application should be self explanatory, and will make perfect sense as you work your way through it. We’re always here if you have any questions along the way, and we’ll do anything we can from our end to make this as easy as possible for you.
The application at this stage is just information gathering, so don’t worry if something isn’t quite right. We’re going to review it in detail and make any required changes from our end. If it’s not perfect when you submit it through to us, we’ll ensure it’s perfect before we submit it through to the lender for approval. It’s really important to me that you have a great experience with the entire process, so my team and I will do everything we can to ensure that you not only have a great experience, but that you have a better experience than you will get anywhere else!