HELPING NEW CANADIANS GET A HOME OF THEIR OWN
April 21 2015 Posted by Tracy Bennett
New Canadians are making their numbers felt in the housing market, as they get settled and make the transition from renter to owner. Using a mortgage broker helps make that transition as easy as possible. With many lenders to consider, we can ensure the most competitive rate and terms.
The most important consideration for new Canadians is credit history and downpayment. If you are new to Canada and do not have any established credit, you can qualify for a mortgage with three months of employment history and by demonstrating credit worthiness to your lender in other ways:
- Proof of timely rent payments confirmed by your landlord (non-family member) and bank statements
- Bank statements showing pre-authorized payments for 12 months for regular payments such as utilities, telephone, cable, insurance premiums, along with a bank reference letter
- A credit report from your country of origin(not mandatory)
Even though it is not required, it is a good idea to start establishing credit in Canada as soon as you can. A downpayment of five percent is the minimum. There are several assistance programs available to new Canadian homebuyers. For example, the federal Home Buyer’s Plan, allows first-timers to withdraw up to $25,000 from a Registered Retirement Savings Plan (RRSP) to buy their first home. A new Canadian homebuyer can deposit funds into an RRSP for 90 days before buying a home and receive a tax benefit. As a new Immigrant an RRSP loan may be a good way to establish credit and build up for a downpayment. Keep in mind any loan payments have to be considered in your qualifying for the mortgage.
Newcomers may also be eligible for the First-Time Home Buyer’s Tax Credit, which allows up to $2000 to be credited towards the Land Transfer taxes.
- Must have immigrated or relocated to Canada within the last 60 months
- 3 months minimum full time employment in Canada (borrowers being transferred under a corporate relocation program are exempt)
- Must have a valid work permit or obtained landed immigrant status
- For 95% LTV, down payment must be from own resources or on deposit for 90 days prior to closing. For LTV's less than 95%, the remainder may be gifted from an immediate family member or from a corporate subsidy
- All debts held outside of the country must be included in the total debt servicing ratio(Rental income earned outside of Canada is to be excluded from the GDS/TDS calculation)
- Guarantors are not permitted
- Foreign Diplomats who do not pay tax in Canada are ineligible for this program
If you are a new Canadian, we can streamline the mortgage process for you, from counseling on credit, to obtaining credit references from foreign banks, to confirming foreign income. We'll advise you on the paperwork you need to assemble to apply for a mortgage, and then present your financial history to the lender or lenders that can best meet your needs.
Call us for a free consultation to prepare to own a Home in Canada!