Canadian mortgages have some quite subtle differences from the UK
system so I have no doubt they will be fairly new to most
nationalities. Whichever type of home you buy, the chances are you will
need a mortgage. There are many different methods of financing a home
buying purchase that are unique to Canada:
Assuming a mortgage - This involves taking over the sellers mortgage
and negates the need to arrange your own financing. The rate you take
on may well be fixed lower than the rates on offer and you should not
be required to pay appraisal and other setup costs. In some cases you
will not have to qualify for the mortgage either, though this depends
on the original terms imposed by the lender. Normally, you will have to
buy out the part of the mortgage already paid off by the current lender.
Standard mortgage - Most major banks will lend up to 65% of the
appraised value to immigrants before they have permanent employment as
part of a welcome to Canada package. This will depend on individual
circumstances and obviously will not be available to some people. Once
you are working in full time employment, normal rules should apply.
Vendor Take Back - Basically, the seller of the property will lend some
or all of the cash required to buy at terms negotiated between you.
This is very attractive to buyers who will not normally qualify for a
mortgage. The debt may be sold to a third party but the original terms
should apply.
With such a major part of your new life on the table it is definitely
worth using the services of a Professional Mortgage Broker. That way,
all the options for financing will be thoroughly explained, sound
advice on the best options for your individual circumstances can be
given and access to mortgage funds can be arranged for most people
under the most favorable terms.
Under international money laundering laws, ALL mortgage providers will
now require proof of origin of any funds used to purchase a property.
It is essential that any lawyers closing statements for house sales,
money transfer receipts, savings statements and bank records are made
available when you apply for a mortgage. Basically ensure you have a
verified "paper trail" for your money!
Finally, most Canadian employers will pay every 2 weeks and so it makes
sense to pay your mortgage "bi-weekly". This means you will make 13
payments a year instead of 12 and so will pay the mortgage off faster.
With Canadian home buying , if you have to borrow more than 75% of the
appraised value of the home it is considered a high ratio mortgage and
Mortgage Loan Insurance will be needed.
