When you apply for a mortgage, you’ll find yourself gathering a lot of paperwork. From bank statements to tax documents, the team at Mortgage Connection can help you navigate each piece. One of the most important documents you’ll need is your letter of employment, and getting it right can make your entire mortgage pre-approval process feel much smoother.
A letter of employment is an official document from your employer that verifies your job status and income details for a lender. This letter proves you have a stable source of income, which gives lenders the confidence that you can manage your future mortgage payments.
What a Letter of Employment Is & Is Not
A Simple Definition
Think of this letter as an official confirmation of your job. It’s a formal document, usually printed on company letterhead, that spells out the key facts about your employment. It’s different from a pay stub or a T4 slip, which only show what you’ve earned in the past. This letter confirms your current and ongoing employment status.
Its Purpose in Your Application
Your mortgage application is all about showing your ability to repay a large loan over many years. The purpose of the letter of employment is to prove you have a reliable job. It confirms the income you stated on your application, showing lenders that you have the financial stability to handle the responsibility of a mortgage. This document helps them understand your mortgage application beyond just an interest rate.
Key Details to Include in Your Letter
Your Personal Job Information
For the letter to be effective, it needs to contain specific details about you. The document should include your full legal name, your official job title or position, and the date you were originally hired. This information establishes your identity and your history with the company.
Ensure the letter confirms you are no longer on probation, as most lenders require permanent status.
Your Income Details
This section is what lenders look at most closely. Your letter should state your annual salary or your hourly wage, along with any guaranteed hours you work each week.
If you regularly receive bonuses, the letter should describe how those are structured so lenders can consider them as part of your total income. They typically require a 2-year average.
These figures are important for calculating things like your Total Debt Service (TDS) ratio, which influences how much you can borrow.
Official Company Information
The letter should look professional and be verifiable. It needs to be printed on official company letterhead and include the contact information—like a phone number or email—for the person who signed it. An authorized representative, such as a manager or someone in HR, should sign the document.
How Your Letter Affects Your Mortgage Approval
How the Letter Shows Income Stability
A strong letter of employment shows lenders a consistent job history, which reduces their risk. This simple document helps build a stronger case for your application and can support you in securing a favourable mortgage rate. It’s a key piece of the puzzle that shows you are a dependable borrower.
For Self-Employed Individuals & Contractors
The process is different if you work for yourself. Instead of this letter, you’ll need other documents when obtaining a mortgage as a self-employed individual. These often include your Notice of Assessment from the CRA for the last two years, proof of business registration, and financial statements.
Common Questions About Employment Letters
The Letter & Your Pre-Approval
You often need a letter of employment even for a mortgage pre-approval. Providing it early helps your mortgage professional accurately calculate how much you can borrow. It also helps speed up the final approval process later on because a key piece of documentation is already complete.
The Letter’s Validity Period
Lenders need the most up-to-date information, so your letter of employment has a shelf life. It is typically considered valid for 30 to 90 days. Once you receive the letter from your employer, you should submit it promptly. Staying organized with your documents is a key part of the 12 steps to buying a house.
Avoid Delays & Get Your Letter Right
Tips for a Smooth Process
You can help keep your mortgage application moving forward with a little preparation. Ask your employer for the letter as soon as you start the application process. When you get it, review it carefully to confirm all the required details are present and accurate before you pass it along.
How a Broker Can Help
Working with experienced professionals can make the process less stressful. The right mortgage brokers can review all your documents, including your letter of employment, to spot potential issues ahead of time. They can also guide you on any specific requirements a particular lender may have.
Connect With Us
Navigating your mortgage application doesn’t have to be confusing. The team at Mortgage Connection is passionate about helping you understand every step with clarity. Contact Mortgage Connection today to get transparent advice on your mortgage journey.
