Newcomer PR mortgage questions

[iSaidGoodDay]

Okay, I think I'm in the market for a house, but I am unsure of how to proceed further. Searched for a few threads and couldn't find anyone with my situation here.

About my situation:
1. Can easily do 35% downpayment.
2. Employed as a contractor with a Canadian company - will move to employment status once I'm in Canada.
3. The mortgage I'd need is between $180k-270k (min to max). The monthly mortgage amount is less than 10% of what I usually make in a month.
4. I haven't landed in Canada yet.

What I'm exploring:
1. Can I open an online bank account without landing in Canada, receive income in it, build 3 months of credit history and get that mortgage? I can additionally get my current Canadian company to show that I was being paid from last 2 years as well. I'm looking at a program like this: https://www.rbcroyalbank.com/mortgages/essential-mortgage-information-for-newcomers.html
2. If #1 is impossible, how long post landing would it take to be able to qualify for that mortgage range? I'll maintain <30% credit card limit usage and pay on time, will get a car on finance to help with credit score.

Am I thinking way too forward in this case? I am planning to talk to a few banks this week/next to get a better idea. But anyone who went through the same if you could share your perspective, it would be helpful.

 

[moscatojuices]

I don't think you'll have a problem getting a mortgage but IMO your idea is super flawed. You have no credit history nor legal status - a bank won't be lending you a cent until you establish yourself in Canada. I think the bigger issue for you is figuring out the city and exact place in that city where you want to live, and then go from there.

Saying stuff like "my monthly mortgage amount is less than 10% of my income" is all well and nice, but if the area is awful, unsafe or kitty corner to a safe injection lab you'll be looking to sell your house very quickly as no-one wants to touch it.

IMO rent first, build your credit score and assets, DYOR on where exactly to live and go from there.

 

[GandiBaat]

Okay, I think I'm in the market for a house, but I am unsure of how to proceed further. Searched for a few threads and couldn't find anyone with my situation here.

About my situation:
1. Can easily do 35% downpayment.
2. Employed as a contractor with a Canadian company - will move to employment status once I'm in Canada.
3. The mortgage I'd need is between $180k-270k (min to max). The monthly mortgage amount is less than 10% of what I usually make in a month.
4. I haven't landed in Canada yet.

What I'm exploring:

1. Can I open an online bank account without landing in Canada, receive income in it, build 3 months of credit history and get that mortgage? I can additionally get my current Canadian company to show that I was being paid from last 2 years as well. I'm looking at a program like this: https://www.rbcroyalbank.com/mortgages/essential-mortgage-information-for-newcomers.html

Typically, you need 20% of downpayment to waive mortgage insurace requirement.
You can not build credit history with an account only. You need to use some credit product like credit card. For that you need a SIN in Canada.

2. If #1 is impossible, how long post landing would it take to be able to qualify for that mortgage range? I'll maintain <30% credit card limit usage and pay on time, will get a car on finance to help with credit score.

Am I thinking way too forward in this case? I am planning to talk to a few banks this week/next to get a better idea. But anyone who went through the same if you could share your perspective, it would be helpful.

Actually, its not too hard to get a mortgage. There are three types of lenders:
1. Big six banks : TD, Soctia, RBS, CIBC, BoM, etc
2. Credit Unions : Too many to list
3. Private lenders: Too many to list

At worst Big six balk at the idea, you can go for Credit Unions and Private lenders. At worst (though unlikely) you will get slightly higher rate (does not matter much for a under 300K mortgage anyway). Set your term to fixed term 1 year or 2 year (not total amortization period.. set that to 25 or whatever). After 1 or 2 year when you are renewing your mortgage, you can get the best mortgage rate from all. No issues.

 

[iSaidGoodDay]

I don't think you'll have a problem getting a mortgage but IMO your idea is super flawed. You have no credit history nor legal status - a bank won't be lending you a cent until you establish yourself in Canada. I think the bigger issue for you is figuring out the city and exact place in that city where you want to live, and then go from there.

Saying stuff like "my monthly mortgage amount is less than 10% of my income" is all well and nice, but if the area is awful, unsafe or kitty corner to a safe injection lab you'll be looking to sell your house very quickly as no-one wants to touch it.

IMO rent first, build your credit score and assets, DYOR on where exactly to live and go from there.

Thanks for sharing that. What do you mean by established? Is it about reaching a certain credit score or spending a few months/years?

Btw, I got the city and specific locations in that city that I'd love to live in for at least 3 years. I looked at safe vs unsafe places too and talked to a lot of people who lived in the city. Definitely came across a bunch of locations that seemed too good to be true

 

[iSaidGoodDay]

Typically, you need 20% of downpayment to waive mortgage insurace requirement.
You can not build credit history with an account only. You need to use some credit product like credit card. For that you need a SIN in Canada.

Another stupid idea that followed was to do a soft landing, get SIN, credit card, etc and come back after a few months. Expenses on back and forth travel aside, if I've a credit card history of a few months - that should be fine?

Actually, its not too hard to get a mortgage. There are three types of lenders:
1. Big six banks : TD, Soctia, RBS, CIBC, BoM, etc
2. Credit Unions : Too many to list
3. Private lenders: Too many to list

At worst Big six balk at the idea, you can go for Credit Unions and Private lenders. At worst (though unlikely) you will get slightly higher rate (does not matter much for a under 300K mortgage anyway). Set your term to fixed term 1 year or 2 year (not total amortization period.. set that to 25 or whatever). After 1 or 2 year when you are renewing your mortgage, you can get the best mortgage rate from all. No issues.

When you suggest the credit unions and private lenders - you mean that they'd be easily open to lending to someone who has no credit history?

Thanks!

 

[moscatojuices]

Thanks for sharing that. What do you mean by established? Is it about reaching a certain credit score or spending a few months/years?

Btw, I got the city and specific locations in that city that I'd love to live in for at least 3 years. I looked at safe vs unsafe places too and talked to a lot of people who lived in the city. Definitely came across a bunch of locations that seemed too good to be true

Talking to people means absolutely nothing and I very VERY highly doubt you understand what safe vs unsafe is if you haven't even set foot on this country. This is not some decision you can make virtually, you really need to be here to get a feel for the aesthetics, people, character and amenities of each area before making a decision for yourself.

Yeah big banks don't want to touch you for a mortgage unless your credit score is 700+, and that can take up to a year. While that sounds inconvenient I think it's a good thing as you're better off renting, building your score and taking the time to really assess where exactly you'd like to live.

Google Maps and chatting on forums are not substitutes for a decision like this... you're marrying a house, you better well be 200% on what you're doing here because it will shape the rest of your life.

 

[GandiBaat]

When you suggest the credit unions and private lenders - you mean that they'd be easily open to lending to someone who has no credit history?

Do one thing. Call up a mortgage broker. You do not need to take their services finally but just ask them. Thats their business -- Get you a good rate. Typically they write your mortgage document and send it to lenders. Lenders do not even bother reading.
Mortgage brokers are dime a dozen in Canada and they all work the same. Just ask them. If you are ready to put 30-35% down payment, a lot of closed doors will open up.

Mortgage brokers do not charge you a dime and you get free BBQ if you visit them at right time :lol:.

 

[iSaidGoodDay]

Talking to people means absolutely nothing and I very VERY highly doubt you understand what safe vs unsafe is if you haven't even set foot on this country. This is not some decision you can make virtually, you really need to be here to get a feel for the aesthetics, people, character and amenities of each area before making a decision for yourself.

Yeah big banks don't want to touch you for a mortgage unless your credit score is 700+, and that can take up to a year. While that sounds inconvenient I think it's a good thing as you're better off renting, building your score and taking the time to really assess where exactly you'd like to live.

Google Maps and chatting on forums are not substitutes for a decision like this...

I am not using only online/forums for the work as I am actually talking in person as well to people who bought homes and realtors too. Forums help you prepare for some of these discussions. The more educated a person is on a topic, the better the quality of discussions are.

If there's a chance to buy, why not see. Right?

 

[iSaidGoodDay]

Do one thing. Call up a mortgage broker. You do not need to take their services finally but just ask them. Thats their business -- Get you a good rate. Typically they write your mortgage document and send it to lenders. Lenders do not even bother reading.
Mortgage brokers are dime a dozen in Canada and they all work the same. Just ask them. If you are ready to put 30-35% down payment, a lot of closed doors will open up.

Mortgage brokers do not charge you a dime and you get free BBQ if you visit them at right time :lol:.

I have a call with someone next week from RBC and another with a mortgage broker too. I'll update on how it goes. Thanks for the suggestions.

 

[moscatojuices]

I am not using only online/forums for the work as I am actually talking in person as well to people who bought homes and realtors too. Forums help you prepare for some of these discussions. The more educated a person is on a topic, the better the quality of discussions are.

If there's a chance to buy, why not see. Right?

Sure, but I highly recommend not committing to buying until you've gotten familiar with the city, its areas, the amenities, proximity to your office, crime rates in your area etc. In smaller cities in Canada, just being one block south or north of a certain area has massive implications from a safety and house value perspective.

You sound like you're overexcited to just buy something the moment you land, I'm just saying make sure you explore in person. You're obviously coming in a very strong position so buying a house isn't going to be an issue with you, it's where you want to buy that's more important.

 

[iSaidGoodDay]

You sound like you're overexcited to just buy something the moment you land.

Haha, definitely not over excited. Wanted to rent a place initially, but renting is a bit hard with pets(got large ones). Still open to everything in case if I can rent Will make my life a bit easier.

 

[iSaidGoodDay]

You posed that question to Gandibaat. I cannot speak for that poster, but I do not see credit unions as being "easily open to lending to someone who has no credit history". Their policies, in some instances, might be more relaxed. By no means a sure thing.

No harm in talking to a mortgage broker or two. They might well hook you up with a lender in the secondary market, which will almost certainly come at a cost of 1 or 2 points (or more) in interest rate.

When I bought my first house in Vancouver, I was a student. I had no credit card. No credit history. In debt. I did not even ask any commercial lender. They would have laughed at me. I found a vendor who was willing to finance the house they were selling. I put about 20% down and the vendor carried the balance for 5 years (I sold and paid them out after 3 years). Sellers often worry less about you showing great credit. They know their property and its virtues and often will finance because they do not really fear taking it back should you default. An older seller, who is getting out of the housing market, will often be content to finance. They'll get more in mortgage interest than they will by dumping the sales proceeds into a bank account.

Thanks for this. Seeing these perspectives is helpful. Even a 1-2% increase would still be a steal compared to some of the rents (and uncertainty).

 

[moscatojuices]

Haha, definitely not over excited. Wanted to rent a place initially, but renting is a bit hard with pets(got large ones). Still open to everything in case if I can rent Will make my life a bit easier.

And see, this is why it's even more important to see the location.... there is a lot of dog/pet theft that occurs for ransom in Canada. So what is your area like for pet safety? Is it close to dog parks? Are houses in that area fully fenced so that you have a secure perimeter? etc.

 

[steaky]

1. Big six banks : TD, Soctia, RBS, CIBC, BoM,

Just five. It's a typo right? Besides it's RBC and BMO - RBS is Royal Bank of Scotland!

 

[GandiBaat]

Just five. It's a typo right? Besides it's RBC and BMO - RBS is Royal Bank of Scotland!

Its six, there is one etc.
https://www.investopedia.com/terms/b/bigsixbanks.asp

And yeah, I do not remember their names... kill me please!