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finding a new home as an immigrant

Buying your first home in Canada is not to be taken lightly. You will need to make sure that you have done your research and that you can afford the payments on your mortgage. Buying a home is expensive. Rarely does a person actually have enough money to buy one outright. This is where lenders come in, giving you the chance to take out a loan that will be secured by the value of your home. That’s known as a mortgage. Let’s take a dive into what a mortgage is, the different types available to you and how you service one over its lifetime to eventually fully own your home.

What is a mortgage?

A mortgage is a loan that is backed by real property. It is provided by a lender, and will be bound by terms (which include the interest charged on the mortgage). When you qualify for a mortgage, you will be given a specific amount of time by your lender to pay it off. Failure to make payments can result in the bank taking over your home as collateral against your failure to repay your loan.

What is a down payment?

Essentially, a down payment is the portion you put down towards the value of your home right up front. This payment is then supplemented by the amount someone is approved for with a mortgage.


You can learn more about special programs for New to Canada home buyers or talk to a mortgage specialist by visiting www.newcomermortgages.ca

What’s the minimum down payment rule in Canada?

In Canada, the minimum down payment someone must be able to make is calculated as a percentage of the home’s purchase price. Depending on how much that house costs, the minimum down payment amounts vary.

For the portion of a home’s purchase price below $500,000, the minimum down payment is 5%.

For the portion of a home’s purchase price from $500,000 to $999,999, the minimum down payment is 10%.

For homes valued $1 million or more, the minimum down payment must be 20%.

 

Do I need a mortgage broker?

You can get your mortgage from your bank or a mortgage broker. The latter tend to be more advantageous for newcomers to Canada as you get more options than just with a bank.

Here are some big advantages of working with a broker:

  1. They may in all likelihood give you a better rate than your bank will because mortgage brokers get wholesale rates and you as a bank customer gets a retail rate. And yes, wholesale rates are lower!
  2. Your broker is a subject matter expert, whereas your bank loans officer may not necessarily have specialized mortgage knowledge.
  3. Your bank will only give you the products they have, so you certainly do not get a wider product choice which the broker can give you.
  4. For newcomers to Canada, a mortgage broker can work not only with the top banks but also with credit unions and other lenders getting you a more flexible deal.
  5. One single application gets a number of lenders to ‘bid’ for your business.
  6. Expert and unbiased advice – your broker will work to get you the best deal out there.
  7. Can often work with less than ideal credit history that newcomers may have.
  8. Single point of contact who manages everything from application to disbursement.
  9. Stress-free – no need for negotiation. The broker works for you, so in order to retain your business, they will get you the best rate. Negotiating with a bank still is no guarantee you have the best possible rate.
  10. Single point credit check. Your credit history will take a hit with several applications, a mortgage broker will get 20 all with one check!

 

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