New To Canada Mortgages
Welcome to Canada!
Just because you are a new immigrant does not mean that you have to wait to purchase a home. If you have been in Canada for less than three years, have landed immigrant status, and have been employed in Canada for a minimum of three months, you can qualify for a mortgage.
New Canadians are making their numbers felt in the housing market, as they get settled and make the transition from renter to owner, purchasing their first homes in this country.
Over 280,000 new immigrants arrived in Canada in 2010, the highest amount in 50 years according to the Department of Citizenship and Immigration. Immigrants are expected to play a large role in the housing market in the coming decades. Between now and 2031, the foreign-born population of Canada could increase approximately four times faster than the rest of the population.
For these new Canadians, first-time home ownership may have proved harder than anticipated, as they faced some unforeseen obstacles such as;
Lack of Credit History; The biggest challenge for many new immigrants is establishing credit because they do not have a financial history in Canada. Without a credit history, it can be a struggle to get mortgage financing. It is important to start establishing credit soon after arrival in Canada. New immigrants are encouraged to bring credit and bank references (preferably in English) with them from their home country to help with developing a Canadian credit profile.
Large Down Payments; Another home ownership hurdle immigrants have faced is that many financial institutions traditionally have insisted that new immigrants provide a down payment of at least 25 to 35 per cent. A large down payment may be difficult for some because they are self-employed and working to establish their own business or unable to access funds from their home country.
The Good News Is Things are Changing!
More and more lenders in Canada are offering mortgages tailored to the needs of new immigrants, including those with non-landed status. In many cases, immigrants can get a mortgage with a down payment of as little as five per cent of the value of the property, as long as it comes from their own resources.
Even better news is that mortgage brokers can streamline the mortgage process for new immigrants, from counseling on credit in Canada, to obtaining credit references from foreign banks, to confirming foreign income; a broker can work with new immigrant clients to present their financial history to the satisfaction of the lender.
To start preparing to apply for a mortgage, the following materials should be assembled:
- Copies of your work permit/landed status papers or passport
- Social insurance number
- Employment letter(s)
- Credit reference(s)
- Documentation of the down payment money source
- Bank statements showing 90 days of account activity
As a newcomer to Canada you may find shopping for a mortgage to be confusing. While some of the terms used will probably be familiar, there will be new ones peculiar to Canada. One reassuring note is that generally you can expect to get a mortgage provided you put 35% down. Shopping for a mortgage in Canada is changing; More lenders are competing for your business. New features and options are being introduced every day. Knowing what’s right for you – and how much to pay – is becoming increasingly complicated. A mortgage broker, who knows all the products on the market is your best key to arranging a quick and efficient new mortgage with best features and options for you.
More than one in five Canadian mortgages are now handled by mortgage brokers. Consumers are increasingly discovering they just don’t have the time to shop from one lender to the next, trying to figure out which deal is the best.
Rather than working for one financial institution, a mortgage broker is independent and deals with many different financial institutions. This allows us to offer you more choices and more competitive rates. It means their advice will be in your best interest.
Best of all, mortgage brokers do not charge for their services since a “finders fee” from the lending institution is paid when you take out the mortgage.
By consulting a mortgage broker you can easily compare what products are available to new immigrants in the entire market place, obtain a pre-approval, determine your down payment and closing costs and save time and energy for the actual house shopping and you will find it is an easier and quicker way to get your mortgage.
Pre-approval of a mortgage is when your lender has reviewed all your financial information and has determined the maximum amount of money you can borrow and commits to a rate hold.
The advantages to pre-approval include:
- You will know what products are available to you as a new Immigrant to Canada and how much you can borrow, so you don't spend time looking at properties that are not suitable.
- You can feel secure that you have an excellent rate guarantee in an ever changing market while shopping for a home, as your mortgage broker can guarantee the current interest rate for up to 120 days.
- You will have an edge when you make an offer, because the seller knows you're more likely to get a mortgage.
- You save time when you apply for your mortgage because you've already assembled your paperwork allowing you to making the "subject too" time shorter.
- You will know the broker is working for you.
When applying for a Pre-Approval, the following information will be needed:
- Personal information such as number of dependents and marital status;
- Details of employment, including a letter from your employer verifying your salary;
- Banking and investment information;
- Details of your assets (i.e.- a car, other property);
- Information on loans and other liabilities;
- Permission to do a credit check.
If you have no credit established in Canada as of yet, a letter of reference from a financial institution from your country of origin will be acceptable as well if you have been in Canada for less than 12 months. Also acceptable is 12 consecutive months of 2 verifiable monthly payments in good standing. (E.g. Phone or utility bill).
If you have sold a home and will be using the funds for your new purchase, a copy of the unconditional contract of Purchase and sale and / or a Statement of Adjustment from the lawyer regarding the sale will be needed.
Once your application is complete, you will be ready to start searching for a home.Email me and we can get this process started right away.
Working with a Real Estate Agent
You do not pay the realtor as a buyer. Realtors receive a commission from the selling realtor for introducing the buyer so it is best to find a Realtor that you feel will do a professional job for you and commit to working with them. This will ensure that you are their top priority and will see all the properties as soon as they are listed. It will also ensure that you that you are working with someone who is trustworthy and looking out for your best interest.
I would be happy to recommend you to one of the many excellent Realtors that I work with on a daily basis. Please let me know if I can help in this regard.
With access to multiple lenders, I'll help you find the best rates, best mortgage options and put you in touch with all the other proffesionals you will need to purchase your home.
Call me, I can help you get started down the path to homeownership in Canada.
Laurie Anne Faulkner 250-588-2288