Immigrating to a new country is a big step with many challenges that one must go through before starting their new life there. For this reason; many Canadian Banks, Lenders and Insurers have introduced New To Canada Mortgage Programs; aimed at assisting new immigrants through the home ownership journey here in Canada!
Many of the New To Canada Programs are offered to those who have immigrated to Canada within the last 5 years and have obtained a valid Work Permit or Permanent Residency. Depending on the lender or insurer there may be limits on the type of property allowed under the program (Owner Occupied with 1 rental unit); maximum mortgage amount or amortization limits. Each lender will have their own terms and conditions for their specific products; as do the mortgage insurers – CMHC; Sagen; and Canada Guaranty.
The New To Canada Mortgage Programs are more lenient in some aspects of the application process; in order to make home ownership possible for those with limited Canadian credit history; or work history here in Canada.
When it comes to employment; many New To Canada Programs will look for a minimum of 3 months employment history with their new employer here; which is similar to traditional mortgage requirements; however, the standard 2 years of income in the field does not always apply. Even if a new immigrant is employed with an International company and is transferred to a Canadian location; verification of the employment may present challenges; so, leniency in this requirement can help with the approval process.
In terms of credit history; traditional approval requirements look for a minimum of 2 years credit bureau history (Equifax or Trans-Union) with at least 2 trade lines displaying responsible use of credit. Someone New To Canada may not have this history; therefore, many programs offer the option of providing either an International Credit Report or alternative sources of credit demonstrating timely payments and no arrears or NSFs. Some alternative sources that may be applicable would be
- Rent Payments
- Utility Bills (Cell Phone, Heat, Hydro, Insurance etc.)
- Letter of reference from the applicants bank
When it comes to down payment; the process is quite similar to a traditional mortgage; the applicant can have as little as 5% down and it can come from traditional sources like personal savings and sale of property. Non-repayable gifts from an immediate family member can also be used for down payments of more than 5% (5% must be from the applicants own resources)
Applicants for the New To Canada Mortgage Programs would also be eligible to the same First Time Home Buyer Programs and rebates offered on a traditional mortgage product or home purchase; like using the RRSP Home Buyers Program and the Land Transfer Tax Rebate; which can be calculated on Tyler’s Mortgage Toolbox App!
Check in next week for our next topic!
Published by Tyler Cowle