I have a little test for you.
Apply for a mortgage on these terms. You have enough cash on hand in your bank account, or in the form of liquid investments, to cough up a 35% down payment on a home. But you have no regular income. Maybe you’re between jobs. Or your husband left you. Or you’re retired. Nonetheless, you have an acceptable credit history, always played by the rules, owned houses before, are a ruly Canadian citizen and, besides, you have a fat down payment of 35%. Will the bank or the broker give you financing?
Now apply on these terms. You have enough cash on hand in your bank account, or in the form of liquid investments, to cough up a 35% down payment on a home. But you have no regular income and have never owned Canadian real estate. Nonetheless, you have an acceptable credit history, and that fat down payment of 35%. Will the bank or the broker give you financing? Oh yeah, and you immigrated to Canada a hundred days ago from Wazookistan and just got your permanent resident card.
Take the test. You’ll discover that the banks will refuse a mortgage to the Canadian and offer it to the new arrival. At a time when the feds are deliberately trying (and succeeding) to derail the national housing market by making it harder to people to score mortgages (like banning those 30-year amortizations), does this seem a tad odd to you? Even discriminatory?
It’s not widely known that banks and mortgage brokers have some special deals for folks who have recently decided to take up residence in this nation. In fact, catering to the immigrant crowd is a big business.
As BC mortgage broker Leah Coss puts it: “As a new immigrant whether you have a job or no job or are self employed, if you put 35 percent down, they don’t care about income, they aren’t going to ask you about credit. They just simply want to see the money, that it’s your own money. It cannot be gifted from a family member or anything like that. It has to be from an account whether it be an overseas account or local account. It has to be an account in your name and be your funds, then you can get a mortgage with 35 percent down.”
Says the Royal Bank: “Down payment without two years’ employment history: If you have a substantial down payment (35% or more), and aren’t able to provide the usual confirmation of employment / income to prove you can service a mortgage, you still may be able to get a mortgage by simply answering a few basic questions about your financial history, and your permanent residency status.”
Says Assured Mortgage Services: “New Immigrants can purchase with 35% down payment and have no job and no credit. Must be in Canada for less than 2 years.
Said a TD mortgage specialist when I interviewed him this week: “An immigrant would need at least 35% down, and a minimum of $40,000 from their own resources. They must have relocated to Canada within the past five years, and pass our own internal assessment. There would be a loan-to-value financing of 65%, but no income qualification or verification is necessary.”
Would the same person who is a Canadian citizen and has lost their job but still has an identical down payment get the loan, I asked? “Sorry, no. We require evidence that the loan can be serviced.”
As for mortgages insured by CMHC, with as little as 5% down, immigrants are also welcomed by our banks.
“In support of providing mortgage financing to new immigrants where no Canadian credit score has been established,” says TD Canada Trust in its online material, “our new policy will allow mortgage financing with loan-to-value ratio up to 95% for qualified new immigrant applicants and insurance from CMHC or Genworth.” In this case you need to be employed – for the last 90 days.
Canada needs immigrants, of course. So does our economy. Without immigration our population would atrophy and without the investment, skill and desire that newcomers bring, we’d all be poorer. But you’d think that twenty or thirty years of paying bank service charges, suffering bad advice from TNL@TB and being force-fed those dreadful mutual funds would have earned you at least equal footing with the new guy.