With over 300,000 new residents arriving in Canada (and over 400,000 expected next year), Canada’s lenders are rushing to the arrival terminals with a variety of qualification programs. However, with so many options to choose from, many new Canadians are seeking out the expertise of a licensed mortgage broker to find the right lending product for their unique situation.
Marko Gelo, a dually licensed Mortgage Broker in British Columbia and Alberta, sheds some light on what to expect as a new Canadian looking to buy a home.
To get started, here are the most asked questions from new and prospective Canadians.
1. Eligibility: Who is eligible for a mortgage in Canada?
The following residency statuses are eligible for mortgage qualification in Canada;
- Temporary Resident Work Visa
- Permanent Resident
- Provincial Nominee recipient
- Non-Resident Canadian
Yes, you must be employed for a minimum tenure of at least 3 months.
3. Down Payment: How much money is required for a down payment on a Canadian mortgage?Depending on your residency status you will require anywhere from 5% to 35% of the property purchase price.
What else should I be aware of?
4. Funds: Make sure your deposit is ready to be cashed.
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- Your deposit needs to be ready for swift movement during the offer stage, especially in a competitive bid process
- The funds must be fully verified by the lender (see below)
5. Verification: Be prepared to submit several verification documents.
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- A 90-day history and/or full verification of the source of your funds. This is a standard request of all lenders as a part of Canada’s anti-money laundering policy.
- Documents to verify your Residency Status.
6. Be aware of property transfer taxes
When you purchase or gain an interest in property, you or your legal professional must file a property transfer tax return and you must pay property transfer tax unless you qualify for an exemption.
Here is how property transfer tax (PTT) is calculated in British Columbia:
- 1% of the Purchase Price on the first $200,000;
- 2% of the Purchase Price that exceeds $200,000 but does not exceed $2,000,000
- 3% of the Purchase Price that exceeds $2,000,000
- An additional 2% on the portion of the fair market value that is greater than $3,000,000 if the property is Class 1 property as determined by BC Assessment
Navigating Canada’s home buying process can be complicated, but is intended to welcome new Canadians into the dream of homeownership. Working with a licensed mortgage broker can help to simplify the process.
Marko Gelo is a dually licensed mortgage broker in the provinces of BC and Alberta. Complete the form below for a personal analysis of your financing scenario:
