Migrating to a new country is a big step for the future and has its own set of challenges.
With 340,000 immigrants that settle in Canada yearly, the abundance of information given to newcomers could see some myths and misconceptions about mortgage & lending rules in Canada.
Newcomers to Canada may find it difficult to buy their first home and all they need is an accurate and more helpful advice.
We have had the pleasure of helping many new Canadians buy their first home in Canada.
Let’s understand as who is new to Canada
A new to Canada or a newcomer, who must have immigrated or relocated to Canada within the last 60 months and has a valid work permit or obtained permanent residency.
Here are some common myths from new Canadians seeking a mortgage:
Need a minimum of 20% Down Payment
The minimum down payment for any traditional mortgage product in Canada is 20% but like Canadian citizens, a qualified home buyer (Temporary or Permanent Resident) can purchase with as little as 5% of the purchase price as a down payment. To qualify, you must have lived in Canada for at least 12 months and can prove credit history in Canada.
Need at least 2 year employment
There are special mortgage programs for Newcomers in Canada who meet the other requirements and do not have the traditional two-year employment history.
The qualified home buyers can purchase their first dream home if they have a full time permanent job (non-probationary) for more than 3 months
Need to be a Citizen
Some major banks won’t accept mortgage application from non-citizens but there can be many others, who will. If you are a permanent resident or have a valid work visa - you can apply for a mortgage
Need at least 2 years of credit history
To qualify for a mortgage, one should have a credit score of 620 or above. If you want to unlock better interest rates, your credit score needs to be much higher.
For New Canadians, they are just starting to build a credit and may not be able to prove a two years credit history. There can be different ways to prove your credit worthiness like 12 months payment history of rent, utility payments or a credit report / history from your former country of residence.
Even with a limited credit history in Canada – you can still qualify if you meet other eligibility requirements.
Don’t qualify for traditional mortgage
The CMHC (Canadian Mortgage and Housing Corporation), Genworth Financial and Canada Guaranty provide mortgages for newcomers who don’t qualify for traditional mortgages. There can many lenders for qualified home buyers in this case.
Higher interest
Most of our lenders offer better products and interest rates for the qualified home buyers.
Mortgage rules can be very different in different countries so a new Canadian should connect up with a Licensed Mortgage Professional who can guide them thru the complete home buying process and a faster & stress free mortgage approval.
Here are a few tips to build your credit history in Canada:
· Open a bank account in Canada
· Get a credit card or apply for a secured credit card
· Become an authorized user
· Get an installment loan
Initial set of required documents;
• Valid work permit or verification of permanent residency
• 3 months minimum full-time employment in Canada (borrowers being transferred under a corporate relocation program are exempt).
• International credit report (Equifax or Transunion) demonstrating a strong credit profile OR 12 months history for : - Rental payment, utilities, telephone, cable, cell phone and auto insurance
• Income confirmation
• Down payment confirmation
Visa still in the process of immigration
For those who are in the process of immigrating to Canada, you will not be able to get a mortgage quite yet. However, it is best to get the ball rolling as soon as you set up your new life here. Apply for Canadian credit cards, find full-time employment, and talk to a mortgage broker so that in the foreseeable future, the Canadian dream can be yours too.
As a licensed mortgage professional, we can answer all questions and assist new Canadians buy their own dream home in Canada.
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