7 Things you absolutely must know about mortgage down payment.

Many of our clients are happy that they have access to a downpayment for a new purchase but no one explained to them what the mortgage requirements are for downpayment verification.

To protect against criminal activity and fraud, there are rules in place required by lenders that you should be aware of. Here are 7 things you must be aware of before your purchase regarding your downpayment:

1. Most lenders require that you provide a 3-month history of your bank account(s) confirming the downpayment. You will be required to provide proof of ownership of that account. Your name should appear on the bank statements or investment accounts. 
2. If a part of your downpayment is being gifted, you need to disclose this at the time of application. Be prepared to show the funds deposited to your account. Also note that gifted downpayment is only acceptable from immediate family members (parents, grandparents or siblings).
3. If using investment/RRSP for your downpayment, the bank will need confirmation that those funds have been available for at least  3-months and you will be required to provide a 3-month history of the account. 
4. Funds coming from outside of Canada must be transferred into your Canadian account at least 30 days before your closing and you may need to provide a 90-day confirmation from the source account.
5. If your downpayment is coming from the sale of your home, provide a firm contract of purchase and sale and the current mortgage statement. 
6. Be prepared to show 1.5% of the purchase price to cover closing costs.
7. If you had any large deposits, show its source. If you transferred money in from another account, make sure you show that account too. Any deposits of $5000 or more are questionable and will require verification.

If you have any questions regarding your downpayment, please feel free to contact me at 905-601-1010 or email me at ashnagre@hotmail.com.