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
• Three months minimum full time employment in Canada
• 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
• All your debts outside of Canada will be included in your affordability ratios, including any mortgages
• We cannot use a guarantor
• You must pay Canadian taxes
Documentation requirements for all New to Canada applications:
• Valid work permit or verification of landed immigrant status
• Income verification
• Down payment verification
• Purchase and sale agreement
With 10% or more down:
• Letter of reference from a recognized financial institution
• Or six months of bank statements from your primary account
With less than 10% down:
• 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
• 12 month history of another alternative source such as your insurance, utilities or cell phone.
Mortgage Insurance and other costs:
1. 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. It is based on a set percentage of the mortgage.
2. Legal Fees – Up to $2000
3. Title Insurance – $309+taxes
4. Appraisal Fees- $350
5. Property Taxes owing to the current owner – will be calculated by your lawyer
Given the 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.
It is important to start developing your Canadian credit score ASAP BUT please do not accept all of the credit card offers you are given. I have seen far too many cases of those New to Canada with up to 10 credit cards which limits their purchasing power
The CMHC website 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 Mortgage Alliance – Regional Mortgage Group in Red Deer.