Land on your feet with the New-to-Canada mortgage program

We held a New-to-Canada mortgage webinar, and the participants loved it!

Introduction to the New-to-Canada webinar

On Wednesday, the 26th of June 2019, we achieved an exciting milestone – holding our first-ever New-to-Canada Mortgage program webinar. Jacques sat down at our cozy office space to chat with our listeners about what to expect if you’re new to Canada and would like to get a mortgage. The Canadian government has created a special program to help new Canadians with status to purchase a home, and we sought out to unpack the ins and outs of this during our webinar. We had a fantastic evening walking through these points step-by-step. Laughs, real-life examples, and practical advice were all present in full force.

With just over thirteen years of experience in the industry, Jacques was able to share and highlight important points to help listeners on their journey to getting the best mortgage. For those of you who don’t know anything about Jacques, he is our owner and principal broker. Jacques had a successful, exciting career in aviation and aerospace before connecting to his true calling: being a guide to those who need it through a business of his own. Jacques thrives in an environment where he gets to make a meaningful difference in the lives of his clients, staff and community – his heroes. He joked in the webinar saying that he used to fall asleep when going to the bank with his mom, and now his passion is mainly in the financial services sector – helping people with their mortgages! Life works in funny ways.

In context

The financial industry isn’t always there to assist with relevant and helpful information, and that’s where we saw the need to come in with this webinar. We’re in the business to solve mortgage problems for those who care about their mortgages. You may have already started your journey in trying to find funding for a home, and if you’ve been turned away from banks and more dominant financial institutions because you’re new to the country, you’re not alone. Many people are feeling this way, and we realize that by bridging this gap, we can help those who are new to Canada to find their feet. The most important thing is to remember that you do have options, and Mortgage Allies will guide you in selecting what’s best for you and your family.

The evening kicked off with a few hearty jokes before moving right over to the practical steps of the mortgage process. The summary we’re sharing is a great, generous all-rounder of the content enjoyed and learnt, but it could never compare to the reality of the actual webinar. We hope you will be joining in for the next one! It’s going to be a blast, and we encourage you to keep an eye out on our social media platforms for updates.

Let’s get going on the recap!

We started by distinguishing between the two types of people we are dealing with in this situation: those who are new-to-Canada, and foreign purchases. Those who are new-to-Canada, have status in Canada either as a Temporary Resident (“Work Permit”) or a Permanent Resident. Temporary Residents have a SIN that generally starts with a “9”. Foreign purchasers, have no status in Canada or may have status in Canada, but are not paying income taxes in Canada.

Are you a permanent resident? If not, and you’d like to apply for a standard mortgage, you’ll need to be able to show that you’ve applied for residency. You also need to have a current work permit.

There are a few hurdles you may have to get over before being accepted as a permanent resident in Canada. The correct paperwork needs to be filled in without fault, the fees paid, and your financial position needs to be portrayed in the light right. We can help you with this – there’s no need to feel stressed out.

Jumping right in, we need to look at the problems borrowers face when trying to get a mortgage in Canada. Firstly, when people arrive in Canada they don’t have credit yet. This is a significant hurdle for many when they’re new to the country.

Credit, credit and credit!

Your credit rating is essential when it comes to getting a mortgage – even more so than your salary. If you’re not sure what your credit rating is, or whether or not you even have a credit rating, we can show you how to check this. In Canada, the process may be a bit different from where you’re from, but we can give you information with ease. Keeping a record of your income is a good starting point. You can also build up a good credit portfolio by getting a credit card, using it responsibly and paying it off every month. We’ve got lots of handy tips to share with you, and our team has done exceptionally well in helping their clients build impressive and secure credit ratings.

To be considered for a mortgage when you’re new to Canada, you’re going to need more credit. This means having two credit facilities with each being two years old, or you’ll need to prove long credit. Here, you’ll have to show that you have one credit facility that is at least five years old.

The solution we propose to our community is the New to Canada Program. As an immigrant himself, Jacques can relate and empathize with the creditworthiness hurdles that are faced. Before we continue to unpack this program, we need to define three terms to give context to our solutions. Having this background will provide you with the “Why” behind certain criteria, and will also equip you with the knowledge of making informed decisions. The terms we are describing here are insured, insurable and uninsurable mortgages.

Insured and insurable mortgages are both insured, but there are differences

If you put down less than 20% of the down payment, you have to pay an insurance fee. GenWorth, Canada Guarantee and CMHC are three examples of companies that can help with this. This mortgage protects you as the borrower, and not the lender.

If you put down more than 20% down payment, you fit into the “insurable” term. Here, the lender pays on your behalf. The lenders get protected in case of default on your payments.

In October 2016, the government brought out the uninsurable mortgage. This is for those who want to purchase a home for greater than $1M. This term is still regulated, but not insured or guaranteed by the government.

Being able to put down a considerable amount towards the total cost of the home adds to your credibility as a mortgage applicant. We will help you determine the correct down-payment size for your situation. We’re your go-to-guide in this department, and we’d love for you to chat with us if you’re feeling uncertain about anything.

The New-to-Canada Program is an insured/insurable program.

As the borrower, you must follow strict guidelines.

You will need the following to be eligible:

The lender you choose must meet the insurer’s guidelines. If their guidelines are even stricter than the lender’s – that is fine.
This program will only apply to you if you have been in Canada for five years or less.
You must have a valid work permit or permanent resident status to be eligible. Foreign purchasers are not part of this program.
You need to keep in mind that most lenders require, even if you are on a work permit, that you have applied for your Permanent Residence.
As a borrower, you need a minimum of 3 months full-time employment in Canada. Note that corporate relocations are exempt from this. For example, someone who is being transferred and works for an international company such as Deloitte.
Standard income verification is required to be eligible for this program.
The purchase price of the home you’re looking to buy needs to be under $1M.
The property you’re looking at must have two or fewer units. To further explain this point, one must be owner-occupied, and the other can be rented out.
To ease your mind, the interest rates in this program are standard, with no incredibly low or high deviations. There are no premiums – phew!
If you have no or limited credit, it’s okay. Damaged credit is unfortunately not acceptable in the new-to-Canada program.
As the borrower, you must follow standard down payment rules, except for the fact that a minimum 5% of down-payment must be from your resources and more than 5% may be gifted from a blood relative or corporate subsidy.
Note that you will have 25 years for amortization.
Purchase and home improvements are allowed, Business For Self (stated income), Borrowed Down Payment, Rental Properties, Secondary Homes not allowed, Home Equity Lines of Credit (HELOC) is not allowed, and refinances are not allowed.
Any foreign debts will be added to the mortgage qualification criteria, and guarantors are not allowed.

If you’re paying a down payment of less than 10%, you need to show an International credit report (Equifax or TransUnion), or alternatively be able to show two different sources of credit showing no arrears. For example, your rental payment history and a utility bill such as the one you would get for your telephone, cable, or cell phone.

On the other hand, if you’re putting down a payment of 10% or more on the purchase property, you will need a letter of reference from a recognized financial institution, or six months worth of bank statements from your primary Canadian bank account.

Let’s talk about preparing for a mortgage when you’re new to Canada.

Firstly, you need to establish and guard your credit. This is so important! We fleshed out some great tips for this at the beginning of the webinar. You can also use our Mortgage Allies New-to-Canada checklist to make sure you’re ticking all the boxes. An extra quick tip is to get a cell phone on contract and pay the bill, on time, every month. This will come in handy as a source for alternate credit.

Try and establish full-time employment where the taxes are deducted at the source. We recommend that you start saving for the down-payment and closing costs as soon as possible. Remember that being able to put cash down, in the beginning, boosts your creditworthiness status as a mortgage applicant.

We do our best to equip our clients and potential clients with all of the information and resources needed to make informed decisions – we encourage you to know the lending landscape and not to only focus on the “best” interest rates. Lastly, let’s get you pre-qualified!

preparing for a mortgage when you’re new to Canada

We do mortgages for people who care.

We’re a mortgage business based around serving, and honestly – we get the biggest kick out of seeing you soar. We aim to help you get the best mortgage, and then to get you mortgage-free as fast as possible. We get that a mortgage is a massive financial commitment, and we understand that you want a home and not necessarily a mortgage. Keeping these truths in mind, we’ve come up with this checklist to get you on track with the documents, thoughts and decisions needed in getting the process going as soon as possible.

Complete the form below to download the FREE New-to-Canada check list.

Thank you so much to all those who joined us that evening, and to those reading and recapping now – we hope you’ve enjoyed the content. We love adding value to our community and look forward to helping you across a variety of mortgage topics in the future. Please let us know how you’ve found this short recap – your feedback means the world to us! Set up a meeting with us so that we can prepare and pre-qualify you for your new home in Canada. Talk to us today!

Licensing Details: Jacques du Preez
Principal Broker Brokerage License #: 12358
Disclaimer: Based on approved credit.
Mortgage Allies E.&O.E.