One of the key factors to a smooth mortgage process is being prepared. Off the bat, lenders will ask you for a list of documents to verify your financial stability and determine if you’re eligible for a mortgage. It’s a great time for homebuyers to get organized and sort through the necessary paperwork they need to start a mortgage application.
If you’re wondering what information is required, here’s a list of some of the tax documents your lender may ask for.
A T1 General is a document that contains information surrounding a person’s income, any deductions, taxes owed and whether or not they’re entitled to a refund. The T1 General is a tax form that must be completed and filed to the Canada Revenue Agency (CRA) by the taxpayer.
A T4 is a document that provides an individual’s employment income information such as their salary or hourly wage. The T4 shows the amount of earnings an employee has made over the course of a year, including any deductions taken from those earnings.
A Notice of Assessment is a document provided by the federal government after a person’s tax return has been completed and filed. The information included on an individual’s NOA is their income from the previous year, the date that the tax return was reviewed, whether or not they’re entitled to a refund and or if taxes are owed.
A pay stub is a document that employees receive each pay period. A paystub can either be a check, direct deposit, e-transfer or any other form of payment. Frequently, lenders will ask their clients to provide a pay stub to verify their income.
A paystub should include:
- The employer’s information
- The employee’s information
- The employee’s pay rate
- The employee’s contributions (CPP)
- The amount owed; the amount before and after deductions
A property tax statement, also known as a tax bill, provides an overview of a homeowner’s tax obligations and is collected during a mortgage refinance or switch to ensure that property tax payments are current. This document will be provided to an individual by their local tax authority in the region where the property is located.
If you’re self-employed, you’ll need to provide all of the above plus a T4A.
A T4A is a document that employers must provide to their employees who are under self-employed commission-based income. The T4A shows the amount of money that was made by the employee within a year, including any deductions.
T2125 Statement of Business or Professional Activities
Self-employed individuals must also be prepared to provide documentation of any business income and expenses. As the income of business owners or self-employed individuals is often considered less predictable by lenders, they may require you to submit income documents from the past three years and show proof of incorporation or a business license.
Buying a home may seem like a stressful experience, but it doesn’t have to be. As long as you have all of your documents in order and the resources you need to lock in a mortgage, you’re set. At Homewise, our goal is to help future homeowners find the best mortgage that suits their unique needs, while ensuring that they’re prepared and informed at every step.
Apply online with us in just five minutes and one of our dedicated Mortgage Advisors will be happy to answer your questions and provide the necessary information you need to complete your mortgage application.
