Banks work with immigrants on qualifying for a new home
April 30, 2009
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Anna Piekarski
SPECIAL TO THE STAR
New immigrants may have difficulty getting a mortgage if they have not established a credit history in Canada, financial experts say.
"Credit is king, it always has been and always will be. In the economy right now, the credit requirements are tougher," says Anthony De Almeida, president and CEO of CanEquity Mortgage.
Many countries do not have credit rating systems so when new immigrants come to Canada, it is important they establish a credit history immediately if they are planning on buying a house. This can be as simple as getting a credit card and paying your bills on time, says Marcus Tzaferis, vice-president of sales and marketing at Morcan Financial, a Toronto mortgage broker.
Educating immigrants on obtaining a mortgage is a difficult process, however.
"A lot of people think that, if I'm new to Canada I can't qualify for a credit card or a mortgage," says Rania Llewellyn, vice-president of multicultural banking at Scotiabank.
Establishing a credit history in Canada is important for immigrants coming from countries where there is no established credit rating system. If immigrants are coming from the United States, United Kingdom or a country that has a credit reporting agency similar to Canada's, then Canadian lenders will access documents related to the immigrants' credit history. But if the country does not have a credit rating system, it is more important for immigrants to establish a credit rating in Canada.
"If they do not have a credit rating, that makes it hard," De Almeida says.
If a new immigrant gets a credit card and fails to make the payments, or has outstanding utility bills, getting a mortgage is nearly impossible, Tzaferis says.
About 30 to 40 per cent of Tzaferis' work is with new immigrants.
The person must have a work permit or have obtained landed immigrant status. Getting this documentation may involve contacting a lawyer and having the lawyer verify or write a letter.
The down payment must come entirely from the applicant's own resources, which usually involves contacting the bank in the applicant's home country to get statements.
Continuity of employment is also a factor. For example, Tzaferis says a person who was a computer programmer in his or her own country and is continuing to work in that field in Canada will be looked at favourably.
The amount of a down payment that is required varies per applicant, says De Almeida.
It is more likely a new immigrant will want to purchase a home three to five years after arriving in Canada, Llewellyn says. The Scotiabank program allows people to apply for the new immigrant mortgage up to 10 years after they have arrived.
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Toronto Star