New to Canada Product Spotlight

It’s invariably a daunting task for people who’ve recently relocated to Canada to get settled in their new country. For a host of reasons, the purchase of a new home – should that even play a part in their initial settlement plan – adds considerably more pressure. But it is not impossible – and that’s where you, the mortgage professional, can make a real difference.

Not every new Canadian will qualify for a mortgage, but determining who you can help – and how – can significantly boost your own clientele base.

What tool is your ally here? Genworth Canada’s New to Canada program makes it possible for qualifying people relocating to Canada to purchase a home with as little as five per cent down.

New to Canada clients are given special consideration when applying for a mortgage because they usually lack Canadian credit history. However, on the advice of friends and family, they may have started the credit building process. And by the time new-comers start looking for a home, there has been some credit established.

Who are we talking about?

Unless they have been transferred to Canada as part of a corporate relocation program, new Canadians usually must be employed for a minimum of three months before they are eligible for a mortgage. This rule is designed to ensure that employees have passed the standard three-month probationary period with their new employer. Lenders also want to see a history of credit repayment, either through an international credit report or bank references from the country of origin.

First you need to determine if your prospective clients actually qualify. They must have immigrated or relocated to Canada within the last 60 months; they need to have a minimum of three months full-time employment in Canada (although borrowers who have transferred under a corporate relocation program are exempt). They must have a valid work permit or obtained landed immigrant status.

If clients are requesting 95% LTV in mortgage financing, then the down payment must come from their own sources, meaning, it can’t be borrowed or gifted. If the LTV is under 95% then 5% must come from their own sources and the balance can come from an immediate family member or from a corporate subsidy (guarantors are not permitted, and foreign diplomats who do not pay tax in Canada are not eligible).

What properties are we talking about?

New to Canada clients can own a maximum of two units/homes as long as one unit is owner-occupied – new construction must be covered by a lender-approved New Home Warranty Program, and existing resale properties must be located in markets with demonstrated ongoing resale demand.

If your clients are self-employed, are looking for a second home or a vacation home, or need Cashback financing, the New to Canada program will not apply. However Genworth Canada has a suite line-up of insurance products that may fit these needs.

What does your prospective client need?

As with any client, you’ll need to confirm income and credit worthiness. In addition to the standard indicators (rental payments for six months and/or confirmation letter from landlord and utility payments for 12 months) you have to take it a step further. If a client has not established credit in Canada, lenders may also ask for all or some of the following:

  • Three- to six-months’ bank statements
  • International credit report (if there’s an absence of Canadian credit history)
  • Letter of reference from a recognized financial institution

If your new Canadian client can prove they had good credit in their country of origin, or already have good established credit in Canada, then they can qualify for the best rates. This would be the same rate that a Canadian citizen with good credit would receive.

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