Canadian mortgages have some quite subtle differences from the UK system I was used to 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 several different methods of financing a home buying purchase that are used in 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 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. Most are independant and will search out the best deal from across the current market as they are not tied to any particular vendor. 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, if you eside in Canada, 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 - this can take around 3.5 years off your mortgage life. 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. There are several companies that will offer this insurance and the mortgage lender will include the premium in the mortgage costs. This is an extremely competetive market so be sure to shop around and push hard for the best deal - including the interest rate, abolition of fee's and the length of any fixed term. |
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