Navigating the mortgage world with new Canadians

Let me be the first to say welcome to Canada. We are pretty darn proud of this amazing country and we know you will love it too.

Now that you have successfully navigated the immigration process, your thoughts have likely turned to owning your own home.

The mortgage lenders and insurers have come up with a few way to help you do this as soon as possible. That being said, it is a special program so there are a few things you should know.

Borrower qualifications for all new to Canada programs – you must have immigrated or relocated to Canada within the last 60 months. You must also have three months minimum full time employment in Canada and you must have a valid work permit or obtained landed immigrant status.

A full 5% of the down payment must come from your own resources, and all your debts outside of Canada will be included in your affordability ratios.

We cannot use a guarantor, and you must pay Canadian taxes. Also, documentation requirements for all New to Canada applications are required as are valid work permits or verification of landed immigrant status.

Income verification includes down payment verification, purchase and sale agreement with 10% or more down and a letter of reference from a recognized financial institution or six months of bank statements from your primary account.

With less than 10% down you must have an international credit report demonstrating a strong history, two alternative sources of credit demonstrating timely payments, such as a letter from your landlord after 12 months stating you have never been late, a 12-month history of another alternative source such as your insurance, utilities or cell phone.

Here in Canada, our mortgage lenders are willing to proceed with mortgage financing to people who have less than 20% down.

All of these mortgages must be insured through the insurers and this is a cost that you will have to pay. It is added onto your mortgage loan so it is not an upfront expense. Legal fees can be up to $2,000, title insurance ($249 plus taxes), appraisal fees – $350, and property taxes owing to the current owner. It will be calculated by your lawyer.

Given the more stringent guidelines for the New to Canada borrower, I would highly recommend that you start the process well in advance.

A letter from a bank in another country can take up to three weeks to arrive if their regulations do not allow it to be faxed or emailed.

Or maybe you are here ahead of your spouse? In that case we may be required to obtain spousal consent which is legally prepared. Again the delay can be lengthy.

The CMHC web site offers information in a variety of languages on all of this information to help you understand your rights and obligations and as always a qualified mortgage professional is invaluable to help you navigate the tricky world of Canadian mortgages.

Pam Pikkert is a mortgage broker with Dominion Lending Centre – Regional Mortgage Group in Red Deer.

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