From the day I arrived at Lester Pearson International Airport, I loved Canada. This beautiful country only genuinely felt like home to my family and I once we owned our first home. Home ownership in any country is a privilege and also an essential part of raising a strong family. The great news is that we have programs for new to Canada mortgages. As a result, becoming a home owner can happen quicker than you think.
New Canadians find it hard to establish credit in Canada despite their solid mortgage repayment track record. The New-to-Canada mortgage program reduces the credit worthiness hurdles that limit borrowers.
“New Canadians” are essentially divided into two groups:
Temporary residents are people who:
- Are on a work permit (not visitor visas) and earn verifiable income.
- Pay taxes in Canada.
- Have had this status for less than 5 years.
- Finally, have a SIN number starts with “9”, which might be an indicator that you are a temporary resident.
Permanent residents are people who:
- Have successfully completed the immigration process.
- Earn verifiable income.
- Pay taxes in Canada.
- In addition, have had this status for less than 5 years.
It is essential that new Canadians establish a credit profile as soon as possible.
The best way to do so, and to establish credit, is to open a secured credit card. This means that the credit limit of the card is secured against a deposit amount held by the financial institution.
For example: If someone wants a $2,000 credit limit on their new credit card they need to deposit $2,000 with the financial institution. This will continue until the borrower has built up enough credit that the card can be unsecured.
Furthermore, it is also important to note that all down payment and closing costs funds for a home purchase must be proven. So, all funds in foreign bank accounts will have to be proven to be from your own resources with a full paper trail.
Here are the major guidelines to the New-to-Canada program that you should have:
- A valid work permit or verification of landed immigration status.
- A “9” SIN number, with proof that they have applied for permanent residency status.
- 3 Months minimum, full time, employment in Canada. (Corporate transfers are exempt from this.)
- 5% Down payment must be from own resources. The remainder can be gifted from immediate family member or corporate subsidy.
- Normal, minimum down payment rules apply.
- Proof credit as follows:
If you have between 5% and 10% Down Payment, you will need:
- Satisfactory International Credit Report.
- Two alternate sources of credit, demonstrating timely payments for the past 12 months:
- Rental payment history confirmed via letter from landlord and 12 months bank statements.
- One other alternate source. E.g. A utility bill to be confirmed via letter from the service provider. Alternatively, a 12 months billing statements will also suffice.
If you have a 10 % Down Payment, you will need:
- Satisfactory letter of reference from a recognized financial institution from your country of origin.
- Six months bank statements from primary bank account.