September 16, 2009

Newcomers to Canada

Can a new immigrant, get a mortgage, upon their arrival to Canada?
Many unscrupulous private lenders would have you believe that they are the only ones ready willing and able to fund a new immigrant’s quest for a mortgage. This would of course involve much higher than normal lending fees, plus additional costs for opening dossiers, evaluations, and so on. In many cases however the private lender is truly the only way to go because of bad credit issues, or lack of credit history.

The problem that the banks have with new immigrants for the most part is that they don’t have a solid employment record, and although they have stellar credit bureau scores in their countries of origin, they have not as yet established a credit history for themselves in Canada.

Lack of established credit and an as yet unproven employment record are certainly excellent reasons for being cautious in the granting of a loan. The banking institutions are after all in the business of making money as opposed to giving it away in a benevolent fashion. There are however several banks that are open to new immigrants and they in fact have programs labeled “Welcome to Canada”. These programs are certainly not for everyone but they do cover a large number of newcomers. There are several criteria which must be met but the banks will offer mortgages with at least a 35% down payment. This program coupled with an offer from CMHC Insurance allows a permanent resident to put as little as 5% down, and a non permanent resident can get a loan of up to 90% of the property value.
The following are some of the guidelines the banks follow in order to process a loan.

A Conventional Mortgage Financing requires that the property be:
•?Owner-occupied Purchase Financing up to 65% LTV
•?Owner-occupied ETO (Equity Take Out) Financing up to 65% LTV
•?Single Advance
•?Maximum amortization is 25 years

All applications for New Immigrants must be supported by:
•?Offer to Purchase (where applicable)
•?Copy of MLS listing (where applicable)
•?Applicants must be residents in Canada (Landed Immigrant Status) or confirm an application for Landed Immigrant Status has been made and received or acknowledged by Immigration Canada
•?Cannot be a resident of Canada for greater than 3 years

New immigrant applicants must have one of the following:
•?Satisfactory international credit bureau
•?Satisfactory letter of reference from a Bank within their country of origin
•?Evidence of liquid assets equal to at least 6-12 months principal, interest and taxes, in addition to the down payment. The investment statement or confirmation must be dated within 60 days of the application date.

Down Payment
•?Minimum down payment of 35% plus closing costs must be confirmed without recourse to borrowing, and funds must be in Canada at the time of application – Secondary Financing is not permitted

Maximum Loan Amount
•?Maximum two (2) properties may be financed under equity lending policy provided an immediate family member resides in 2nd home and total mortgage amount cannot exceed $1,000,000

Rates and Terms
•?Conventional Mortgages
•?Fixed Rate 6 months to 7years, and 10 years
•?Closed VIRM (Variable Interest Rate Mortgage)
•?Standard Pricing Applies

Eligible Properties
•?Maximum 4 units where 1 unit is owner occupied principal residence
•?New Construction or Resale – Single Advance
•?Full appraisal of the subject property required in every instance
•?Title Search may be ordered by Credit Centre where deemed necessary

Insured mortgages with CMHC
As mentioned earlier CMHC will fund a mortgage to a higher ratio of between 90-95% however once again certain criteria must be met.
The CMHC may not necessarily look at your credit score but they will study your payment habits over the past year. They will examine your last 12 months payment history for things such as rent, and utilities (such as Bell, Cable, and Hydro) as well as things such as daycare. Another important item that they will look at is whether within the past year you have been able to establish certain credit lines such as savings accounts and opening up credit card accounts in good standing.

As you can see there is more than one way for an immigrant to obtain a mortgage but one must be cognizant of the fact that it is never too soon to try and establish credit.

To find out if you qualify for this or any other type of mortgage loan please contact me, or fill out the contact form on my home page at so that I may contact you.

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