Do you have clients who are moving to Canada or are you moving to Canada and looking to buy a home? If so then there are programs available where you can borrow up to 95% of the purchase price of a home.
In the past year I have helped clients from England, China, Jordon, South Korea and Israel secure financing for a new home here in Canada. They ranged from 35% down to as little as 10% and all are now in new homes and starting a new life in this great region of Canada. We must note that this is intended for clients who have been in Canada for less than 5 years.
Let’s start with those clients who are moving here to start a business and/or do not have employment at the present time. These type of clients are normally subject to a max of 65% of the purchase price or 35% down payment. We must note that the monies need to be in a Canadian bank account and a paper trail of where these funds came from must be provided. Depending on the lender the money may need to have been here for at least 30 days. (At the time of this writing there is a lender that allows funds to be transferred and in a Canadian bank account prior to closing – could be a few days before. However the lender normally requires all conditions to be met 10 days prior to closing so it pays to address this at the application stage)
Now as you may well expect these clients would not have any Canadian credit established so we need to establish there credit worthiness. This can be done via an international credit bureau (time consuming and difficult to get depending on the country) or the best alternative is a credit reference from their own bank in the country they are from.
We now need to determine their status in Canada. In order to qualify for this product a client must have landed immigrant status or proof they have applied for this status and have received confirmation from the Canadian government in regards to said application. (note a work visa/student visa will not satisfy this condition)
If the clients do not have any form of Canadian income then they will be required to provide evidence of liquid assets in Canada that is greater than or equal to 50% of the property value/purchase price, inclusive of the down payment. Again this would be verified with a statement from the bank here and a paper trail of where the funds came from. Like Canada the clients have access to their own bank account in their own country and can provide statements of such. The down payment must come from clients own resources and cannot be gifted or borrowed.
So now let’s discuss those clients who have moved to Canada and have stable employment. Policy states they must have been employed for at least 3 months but some exceptions can be made. These exceptions can include a relocation or clients profession. (Doctors for example with a accepted offer though the down payment may have to be increased)
Clients that fall under this category can apply for up to 95% financing or 5% down. The deal is insured via CMHC newcomer program , Genworth New to Canada or Canada Guaranty Mapleleaf program. Each product has its own policies and procedures.
The 5% down payment has to come from clients own resources but we note that any amount over the 5% can be gifted. The incomes must be provable and any debts outside of Canada have to be included in the clients ratios.
We must note that the client has to have landed immigrant status and confirmation of applying for this status does not qualify. You can check out the requirements here.
A few other things to consider are: property can be a max of 2 units with 1 unit being owner occupied, property must be owner occupied, progress advance, cottages and second homes are not allowed under these programs also BFS insured clients are not allowed either. (this falls under the program explained above)
So as you can see there are programs to help your new to Canada clients. Make sure you are dealing with someone who understands these programs and what is involved to get them approved and funded as they can be difficult. I have extensive experience with this type of lending and even with the language barriers I have been able to successfully approve and fund these deals quickly and efficiently. These clients need the attention as they are unsure of the rules and regulations here and need the time to help them understand what is involved and required. This could mean us helping them secure the insurance, inspections etc but the time spent is well worth it. Remember this is a niche market and if you can help one of them they are very loyal and will advise their friends and relatives. I have noticed that friends and family normally follow and this opens a chance to get more deals done.
So take the time with these clients as your efforts will be rewarded. I ensure all requirements, questions are addressed prior to sending client out looking for a home. By doing this I have the documents and conditions required and once we get the purchase and sale the approval and financing letter can come quickly.
Note that policies and procedures do change but at the time of this writing we still have great rates and products available. I will also note that these clients get the same great rates we enjoy.
As always comments, shares and likes are appreciated.
Eric Gall is the owner of Avanti Mortgages (operating as a mortgage specialist for TMG Atlantic). If you are purchasing, refinancing or renewing your mortgage contact Eric or check out his website and apply online.