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If you are a new immigrant to Canada, welcome! It can be daunting to get settled in a new country, and if you have purchasing a new home high on your list of priorities, this blog article should help get you acquainted with what is involved in securing a Canadian mortgage. You may be happy to learn that in most cases, your recent arrival should not penalize you, and that you should be eligible to borrow at very competitive market rates.
Read on for general guidelines and financing options for individuals in three different situations: people visiting on work visas and landed immigrants who are employed; non-landed immigrants who are employed; and new immigrants who are not yet working but who have applied for, or have been granted, landed immigrant status.
New Canadians must be employed for a minimum of three months before they are eligible to apply for a mortgage. This lender rule is designed to ensure that employees have passed the standard three month probation period with their new employer. Lenders will also want to see a history of credit repayment, so if you are able to provide an international credit report from EquifaxorTransunion, or bank references from your home country, you will fortify your mortgage application and increase your chances.
Beginning to collect a Canadian credit history is another key step in your mortgage journey. Applying for a credit card is a good way to start the process. If you encounter trouble with traditional creditors, consider a secured credit card. These are easier to get and this is how they work: if you are approved for a $1000 limit on a secured credit card, you pay the creditor $1000 upfront as security, and after demonstrating a period of successful repayment (which is typically twelve months), you get that money back.
Lenders know and understand that it can initially be difficult to establish Canadian credit, so they do consider credit history from alternative sources, such as a letter from a landlord showing twelve months of on-time payments, or copies of utility bills that show regular payments being made for the minimum of a year. Remember that you are only considered ‘new’ for thirty-six months after arriving, so any extra flexibility given to new immigrants goes away after the three year term is up.
Visitors here on work visas and landed immigrants who are employed for a minimum of three months may qualify for up to 95% financing, on the basis that they have a strong international credit report or are able to provide proof of twelve months timely payment of two alternative sources of credit such as utilities, cell phone or internet bills. You can only borrow against your primary residence, but other than that, for borrowing purposes, you are Canadians.
Non-landed immigrants who are employed for at least three months and who can meet the same credit and alternative credit guidelines may qualify for up to 90% financing. If you find yourself in this group, you are limited to purchase transactions (no refinances) and to single-unit primary residences. The lender may confirm that you have applied for landed status.
New immigrants who do not yet have landed status and are not yet employed are eligible to borrow between 65% to 75% of the value of a property, given that they can providea good strong credit history. To add to the larger down payment, borrowers needing 65% financing must show liquid assets equal to six months of mortgage taxes, and borrowers wanting 75% financing must show additional liquid assets equal to 25% of the property’s purchase price.
To avoid being exploited by a mortgage advisor which unfortunately sometimes happens with new immigrants, shop around. Blind trust can be expensive so get to know all you can about the subject. There is no reason why your first experience with a Canadian mortgage should not be a good one.
Now that you have a few general guidelines to use when applying for your first Canadian mortgage, you may want to review my past blog articles on other topics such as mortgage pre-approvals, tips for first-time home buyers and money saving tips. If you have any further questions or would likehelp specifically for your personal situation, feel free to contact me!
Posted onMarch 8, 2016
By Irina MarshallMortgage Real Estate
Tags:canadiancreditimmigrantMortgage
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