Mortgages
Mortgages
Here's a breakdown of the unique aspects of Canadian mortgages compared to other systems:
Types of Canadian Mortgages:
Assuming a Mortgage:
Process: Take over the seller’s existing mortgage.
Benefits: Potentially lower fixed rates, no need for new appraisal or setup costs, and possibly no qualification requirements.
Considerations: You may need to buy out the portion of the mortgage already paid by the seller.
Standard Mortgage:
Immigrant-Friendly: Major banks might lend up to 65% of the appraised value even if you don’t yet have permanent employment, as part of a “welcome to Canada” package.
Full-Time Employment: Once employed full-time, you’ll need to follow standard mortgage rules.
Vendor Take Back (VTB):
Process: The seller of the property lends you some or all of the purchase price.
Terms: Terms are negotiated between buyer and seller, and the debt may be sold to a third party but the original terms usually apply.
Benefits: Useful for buyers who might not qualify for traditional mortgages.
Additional Considerations:
Professional Mortgage Broker: Hiring a broker can help you understand all financing options, get sound advice tailored to your situation, and access the best mortgage terms available.
Proof of Funds: Under international money laundering laws, you must provide proof of the origin of any funds used in the property purchase. This includes lawyers' closing statements, money transfer receipts, savings statements, and bank records. Maintaining a verified "paper trail" is essential.
Bi-Weekly Payments: Many Canadian employers pay every two weeks. Paying your mortgage bi-weekly (13 payments per year instead of 12) can help you pay off the mortgage faster.
High Ratio Mortgage: If you borrow more than 75% of the appraised value of the home, it’s considered a high ratio mortgage, and Mortgage Loan Insurance will be required.
These elements make the Canadian mortgage system unique and can impact your home financing strategy.
