New to Canada Housing Program

New to Canada Mortgage

If you are new to Canada and need a mortgage to finance a home purchase, there are a number of decisions you will need to make and supporting documentation you may need to provide. As a newcomer, you will lack a Canadian credit history and, therefore, may find it more difficult to secure financing.

The first thing you should do is start building credit as early as possible. There are a number of ways to do this, but here are some highly recommended tactics:

· Open a bank account and perform frequent transactions.

· Pay your bills in full and on time, including rent, utilities, and telecommunication services.

· Apply for a credit card.

· Apply for small loans from your bank and make regular payments.

· Prove that you have a consistent source of income by staying with the same employer for a sufficient amount of time.

Supporting documentation for a New to Canada Mortgage

The good news is that you can obtain a New to Canada Mortgage with similar terms to a typical mortgage application, but you may need to provide additional documentation supporting your credit history and ability to pay.

Two things you will definitely need to provide are income verification, via an employment contract and/or salary deposits, and a valid work permit or landed immigrant status. Depending on your individual situation and the lender, there is also an array of other credit proofs you may be required to supply as well.

These credit proofs may include, but are not limited to:

· Rental payments for ‘X’ months and/or confirmation letter from landlord.

· Regular payments towards utilities, telecommunications, insurance, etc, and/or confirmation letter from service provider(s).

· Banking history.

· Letter of reference from a recognized financial institution.

· ‘X’ months bank statements.

· Documented regular savings for ‘X’ months.

· International credit report.

The remaining inputs for your mortgage application are typical to a traditional Canadian mortgage with only a couple noted exceptions.

New to Canada Mortgage down payment

As per Canadian regulation, you will be required to put down at least 5% of your home value as a mortgage down payment. The Canadian Mortgage and Housing Corporation (CMHC), Canada’s leading mortgage loan insurer, states on its website that it insures newcomers with permanent resident status was as little as 5% down payment, while non-permanent residents can purchase a home with a 10% down payment.

You do not need to purchase mortgage insurance, however, if your down payment is more than 20% of your home value, which is known as a conventional mortgage.

New to Canada Mortgage provider

You can obtain a mortgage through a traditional lender such as a bank or credit union, or you can do so through a Canadian mortgage broker. Mortgage brokers provide an origination service – lenders service the loan – and will guide you through the mortgage process. Mortgage brokers have access to many lenders and products, and therefore, supply very competitive mortgage rates.

Amortization Period

The amortization period is the amount of time it will take to pay off your mortgage. In Canada, the maximum amortization period is currently 35 years, but as of March 18, 2011 this will be reduced to 30 years. A longer amortization period will reduce your monthly mortgage payments by spreading them over a longer time frame, but will equate to more interest paid over the life of the mortgage.

Term

The mortgage term is the amount of time you commit to the contractual provisions and mortgage rate with your lender. Typical terms are between one and 10 years, with five years being the most common. When your term is up, you will need to negotiate a new contract with a mortgage rate available at the time.

Interest Rate Type

The final major mortgage decision you will need to make is the type of mortgage rate you want. Mortgage rates can be either fixed, at a constant rate of interest over the mortgage term, or variable, fluctuating with market interest rates. This is a personal decision based on your unique tolerance for risk and predictions on future interest rate direction.

For more information on the standard mortgage process and additional home buyer resources, please visit RateHub’s comprehensive Education Centre.

When you are ready to purchase I would be happy to represent you in a purchase. Call me David Pylyp 647 218 2414 Lets get started