While moving to a new country might be thrilling, it can also be very difficult for new immigrants to find the correct mortgage choice. If you’re a new immigrant to Canada, you may not yet have a solid credit history, but you can establish one over time. Fortunately, immigrants can now take advantage of a variety of innovative mortgages designed with them in mind.
Who is Eligible for a New Immigrant Mortgage?
You must fulfill a few eligibility standards in order to obtain a new immigrant mortgage in Canada. These elements will typically have an impact on your capacity to obtain a mortgage and raise your chances of receiving the greatest conditions.
Here are some requirements for the new to Canada mortgage program if you are regarded as a newbie to Canada (someone who immigrated here within the last five (5) years).
- You must have a permanent resident status
- Have admissible income
- You must have immigrated to Canada within the last five (5) years
- Either international credit or be able to provide an alternative source of good payment history (utilities, rent, insurance etc.)
Prior to receiving your permanent residence status, you can only apply for temporary resident mortgages in Canada when you first arrive. If you don’t have the money to buy the house altogether, this implies that your aspirations of getting a mortgage and owning a home are intertwined.
Apart from the aforementioned requirements, the requirements for obtaining new immigrant mortgages are the same as those for Canadian citizens. Only the minimum down payment variations have exceptions. At first, getting loans for non-permanent residents may appear difficult, but after you start the procedure, you’ll notice that it’s simple. In fact, statistics show that up to 18% of mortgage consumers in the majority of the provinces are foreign-born.
Increase Your Down Payment
Between 5% and 25% of the home’s buying price must be put down as a minimum to acquire a property in Canada. A bigger minimum down payment would normally be required for a home that costs more. Here is an explanation of how the minimums operate:
- 5% down payment for homes priced at $500,000 and below
- 5% on initial $500,000 plus 10% on the balance left over for homes priced at above $500,000 but less than $1,000,000
- 20% flat down payment for homes priced above $1,000,000
How much you are ultimately able to spend on a house is greatly influenced by the precise amount you are willing to put down as a down payment.
You can obtain a greater mortgage amount with a larger down payment, giving you more money to spend on a home. Fortunately, this is a factor you can readily improve. For example, you could save money to put down a significant down payment.
Increasing your down payment can also result in long-term savings of tens of thousands of dollars. You would avoid paying mortgage insurance, which has the dual consequence of lowering the amount you can borrow and raising your monthly payments if you made a minimum payment of 20%.
How to Get a New Immigrant Mortgage in Canada
Start building on your Canada credit history
You’ve probably already learned that since you’re new to Canada, getting a mortgage requires having a solid credit history. Your chances of being approved for a home loan from Canadian banks depend on your credit score, which has been built up over time. The good news is that creating a new credit history for immigrants is simpler than trying to repair damaged credit.
Steps you can take to build your credit history include:
First, comprehend how credit history functions. Your credit score, which ranges from 300 to 900, represents how creditworthy you are. Any score over 680 that is derived from the data in your credit report is considered to be good. Your ability to borrow money is more closely associated with your credit score than with any other factor.
Consider Factors that Affect your Credit Score:
As soon as you arrive in Canada, you should begin making preparations if you want to obtain loans for non-permanent residents. You can improve your credit score by making deliberate efforts to maintain a strong payment history, debt load, variety of credit, age of credit, and new credit queries.
Get a Secured Credit Card:
You can increase your chances of being approved for a mortgage as a newbie to Canada by getting a secured credit card. Your secured card provider will submit information about your credit activity to the credit bureaus immediately, which can improve your credit history.
Get a Cell Phone:
In Canada, a lot of cell phone providers don’t ask for credit history but nevertheless, report your phone bills to the credit bureaus. Instead of pre-paid, choosing monthly plans is an excellent approach to establishing your credit history.
Paying Bills On Time:
Paying all of your obligations on time is the greatest approach to establishing your credit history so that you can get a newbie mortgage in Canada. This will increase both your trustworthiness and your credit score. Lenders require proof that you can make prompt and complete payments.
Get Preapproved for a Mortgage Amount
The process of getting a mortgage pre-approval in Canada can be broken down into many parts after you discover a qualified mortgage lender. Lenders will want your personal information and a number of credit documents in the first phase so they may perform a credit check on you.
The second phase, known as the assessment process, is when the lender decides how much money you can borrow overall and what the interest rate will be. You will receive your pre-approval for the mortgage once these are sorted and all other factors are equal.
Find a home that fits your budget and needs
Your authorized new immigrant mortgage amount decides the type of home you should be shopping for based on your financial resources. Remember that you are not required to spend the entire amount for the house just because you have been preapproved for a particular amount.
Make an offer on a home
It’s time to submit an offer when you’ve located a residence that meets your needs and price range. Since you’re a new immigrant to Canada, you might wish to work with a realtor who is knowledgeable about market conditions and real estate purchases in this country and ask them to make a competitive bid.