Five ways newcomers to Canada can prepare for their mortgage applications
Every year, hundreds of thousands of people come to Canada to start a new life – and many arrive with a strong desire to buy their own homes.
In fact, a 2019 Royal LePage survey found that newcomers to Canada represent one in every five home buyers. The same survey also revealed that three-quarters of newcomers arrive with savings to help purchase a home.
And while having savings to put towards a down payment is helpful, there are other considerations newcomers to Canada should keep in mind if they are aiming to become homeowners.
Who is considered a newcomer to Canada?
Statistics Canada defines a newcomer as a landed immigrant who has been in Canada for five years or less.
If you are new to Canada and are looking to buy a home, there are several ways you can prepare for your mortgage application and kickstart your homeownership journey.
1. Find the right neighbourhood for you.
Since buying a home is a big financial decision, where you choose to live is an important consideration. In this light, it pays to think about how a potential area fits your needs and lifestyle. For instance, is being near a local cultural community centre important for you? Or maybe you would rather be within walking distance to schools or transit options?
And once you have found your ideal area, you can look through our breakdown of the different types of houses in Canada to help you decide what kind of dwelling could best fit your lifestyle.
2. Build your credit history.
Your credit score is an important element that lenders use to determine whether you qualify for a mortgage. And this may be a challenge if you are a newcomer with no credit history.
So, it might be beneficial to start establishing your credit history in Canada. There are several effective ways you can do this, such as applying for your utilities in your name or applying for a secured credit card.
Additionally, alternative lenders such as Home Trust have solutions for newcomers that evaluate your entire financial story, including factors such as future earning potential.
3. Save for your down payment.
While many newcomers arrive with savings to put towards a down payment, having a larger amount can open up the types of homes you can afford and the range of financing options you could qualify for.
Just remember that saving for a larger down payment takes careful planning and discipline. In a previous post, we outlined several strategies to help you start saving.
4. Have your supporting documents ready.
Supporting documents can help lenders look at your entire financial story, so it is important to have these documents on hand. Documents that can help a newcomer’s mortgage application include proof of resident status such as a permanent resident card or work permit, employment contracts and pay slips, bank statements and a credit report from your country of origin.
5. Work with an experienced mortgage broker.
Mortgage brokers are licensed professionals who have relationships with different lenders, allowing them to find the best mortgage options for you. An experienced mortgage broker will understand your background as a newcomer and will work with you to find out what you need to reach your goal of homeownership.
Being a newcomer to Canada means enjoying all the opportunities your new country can offer. Learn what can happen when you say “yes” to buying your own home in Canada with our interactive road map.
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