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A Home of Their Own - New Immigrants Face HurdlesPosted on: 2012-03-06
New Canadians are making their numbers felt in the housing market, as they get settled and make the transition from renter to owner, purchasing their first homes in this country.
Over 280,000 new immigrants arrived in Canada in 2010, the highest amount in 50 years according to the Department of Citizenship and Immigration. Immigrants are expected to play a large role in the housing market in the coming decades. Between now and 2031, the foreign-born population of Canada could increase approximately four times faster than the rest of the population.
For these new Canadians, first-time home ownership may prove harder than anticipated, as they face some unforeseen obstacles, but there are definite opportunities.
Lack of Credit History
The biggest challenge for new immigrants is establishing credit because they do not have a financial history in Canada.
Without a credit history, it can be a struggle to get mortgage financing. It is important to start establishing credit soon after arrival in Canada. New immigrants are encouraged to bring credit and bank references (preferably in English) with them from their home country to help with developing a Canadian credit profile.
Large Down Payments
Another home ownership hurdle immigrants have faced is that many financial institutions traditionally have insisted that new immigrants provide a down payment of at least 25 to 35 per cent. A large down payment may be difficult for some because they are self-employed and working to establish their own business or unable to access funds from their home country.
The good news is that things are changing. More and more lenders in Canada are offering mortgages tailored to the needs of new immigrants, including those with non-landed status. In many cases, immigrants can get a mortgage with a down payment of as little as five per cent of the value of the property, as long as it comes from their own resources.
To start preparing to apply for a mortgage, the following materials should be assembled:
- Copies of your work permit/landed status papers or passport
- Social insurance number
- Employment letter(s)
- Credit reference(s)
- Documentation of the down payment money source
- Bank statements showing 90 days of account activity
The great news is that mortgage brokers can streamline the mortgage process for new immigrants, from counseling on credit in Canada, to obtaining credit references from foreign banks, to confirming foreign income; a broker can work with new immigrant clients to present their financial history to the satisfaction of the lender.