Buying appartment after one year as PR

[miloslj]

Hi,

I am pr for one year now in toronto. I do not have 20.000,00 dollars for downpayment, but I sow that ontario help with that. How is that thing going with new immigrant?

Thanks

 

[scylla]

You need to have a minimum down payment of 5% if you want to buy an apartment.

 

[canuck78]

Have you been in Canada more than a year? You will need to establish credit history to qualify for a conventional mortgage. There are also fees involved in buying a home like lawyers, real estate commission, land transfer tax (a second on if buying in Toronto), etc.You are right you will get a rebate from the province on one of the land transfer taxes. All those will cut into your deposit.

 

[NetMecca]

If you do not have a large deposit, and hardly any credit history you will have some trouble getting financing. You may just have to be a little patient for a little longer

 

[alok4best]

Hi,

I am pr for one year now in toronto. I do not have 20.000,00 dollars for downpayment, but I sow that ontario help with that. How is that thing going with new immigrant?

Thanks

Why do you expect the Govt and in turn other tax payers help you with down payment. Save up before you think about buying. If you can't save for down payment, how would you repay the mortgage.

 

[miloslj]

Well, I am PR more then one year.

Thanks for all information.

For last question. I said what I heard. And I had realestate agent in my rental appartment talking about that. I can not save because rent is higher then mortgage, so if I do not late with rent, I will not late with mortgage.

 

[canuck78]

I think it may take up to 5 years to get conventional financing. Before you look at real estate I would suggest going to a mortgage broker and asking whether you qualify for financing and if so how much and what are the terms.

 

[alok4best]

Well, I am PR more then one year.

Thanks for all information.

For last question. I said what I heard. And I had realestate agent in my rental appartment talking about that. I can not save because rent is higher then mortgage, so if I do not late with rent, I will not late with mortgage.

Honestly I don't think rent can be higher than mortgage in Toronto. How much are you paying towards rent. What you must be missing out is that on top of mortgage, a home owner also has to pay property taxes, and maintenance in case it's an apartment/ condo.

Now coming to your other questions, yes you can get a mortgage with 1 year credit history, given you can show regular employment income. My wife and I landed in Nov-2015, and got approved for a conventional mortgage with a big bank in Oct-2016. But we saved some 60K in one year, and had regular employment. a history of regular credit card, utility bill payments etc to back our application.

I have nothing against you, but I would again say that if you are find it difficult to save anything towards down payment at all, then you should really re-think buying. Feel free to ask more questions if you wish. Also, if you don't mind sharing some more details, like your monthly household income, how much rent you are paying, how many people in your household, kind of apartment you want to buy, then we can probably help a bit more.

 

[canuck78]

Don't forget ongoing maintenance issues. If the fridge breaks, the roofs leaks, the furnace stops working, etc

 

[NetMecca]

If you are able to get credit somehow (I got my first mortgage in Canada in less than two years), there is another style mortgage which I personally favour for many reasons.

It's call home equity loan (home equity line of credit). This is an interest only mortgage. You are not required to make any minimum amounts down payments except for servicing the interest on the mortgage. You can also use it like a current account so money in and out is no problem and easy. This means you can pay your full salary into your mortgage and use the money as you need. Interest rate is prob about 0.5 percent higher but with your ability to stash extra cash in there, the offset is well worth it.

Example : $285k mortgage regular over 20 years 3.5% interest $1715 monthly payment
Home equity loan (Interest only) $285k = $831 monthly plus mortgage insurance probab about $50/month.

This reduces your cost of living significantly overall and certainly a better option than just renting, since you get the benefit of equity growth from ownership.

Downside : If you only pay the interest you will never pay off your mortgage.
Upside : if you stash extra cash and savings into your mortgage you effectively earn the mortgage interest rate as apposed to the dismal rates available under GICs

I have used this mortgage style in two countries and probably for over 20 years. Works really well, especially if you are able to manage your money even marginally well.

Good luck

 

[miloslj]

Ok, lets start:

1. In Mississauga rent for two bedroom apartment is 1600 to 1700, depend on building, but if I want AC and inside parking that is it.

2. yes this include utilities and maintanence

3. household income is about 6000 - 6600. I am looking into 2 bedroom apartment (250k-350k). 2 persons, but my dad have bad credit and it will stay in credit history for about 2 more years, but my dad can give me money for the monthly payment and I can pay bills, because that part is bigger (4000 for my dad and 2600 or more for me). I have clean credit history with 3 CC and paying on time.

Thanks for information about this another type of mortgage, I will ask in the bank about that and search on the internet about that more.

 

[alok4best]

If you are able to get credit somehow (I got my first mortgage in Canada in less than two years), there is another style mortgage which I personally favour for many reasons.

It's call home equity loan (home equity line of credit). This is an interest only mortgage. You are not required to make any minimum amounts down payments except for servicing the interest on the mortgage. You can also use it like a current account so money in and out is no problem and easy. This means you can pay your full salary into your mortgage and use the money as you need. Interest rate is prob about 0.5 percent higher but with your ability to stash extra cash in there, the offset is well worth it.

Example : $285k mortgage regular over 20 years 3.5% interest $1715 monthly payment
Home equity loan (Interest only) $285k = $831 monthly plus mortgage insurance probab about $50/month.

This reduces your cost of living significantly overall and certainly a better option than just renting, since you get the benefit of equity growth from ownership.

Downside : If you only pay the interest you will never pay off your mortgage.
Upside : if you stash extra cash and savings into your mortgage you effectively earn the mortgage interest rate as apposed to the dismal rates available under GICs

I have used this mortgage style in two countries and probably for over 20 years. Works really well, especially if you are able to manage your money even marginally well.

Good luck

That's not how a home equity line of credit(HELOC) works in Canada. You cannot get a HELOC to buy a house from scratch. HELOC is essentially a loan you get against the equity you already have in a house.
Let's say you bought a home for 500K, where 450K was your mortgage and 50K was your down payment.
Few years down the line, let's say the valuation went up and the house is now worth 700K. And you were also able to repay further 50K of your mortgage. So now you owe the bank 400K.
Now HELOC allows you to draw your equity upto 80% of the home's worth. So 80% of 700K is 560K. Out of this, you still owe the bank 400K. So with this formula, you could get a loan for upto 160K at very low interest rates. People usually take out HELOCs for things like renovation, or buying another house, or simply to invest, as HELOCs have very low interests compared to personal loan. For example, right now you could get a HELOC at as little as 3-4% per annum, and if invested wisely, you could earn 7-10% easily. So you are net in profit.

 

[steaky]

That's not how a home equity line of credit(HELOC) works in Canada. You cannot get a HELOC to buy a house from scratch. HELOC is essentially a loan you get against the equity you already have in a house.
Let's say you bought a home for 500K, where 450K was your mortgage and 50K was your down payment.
Few years down the line, let's say the valuation went up and the house is now worth 700K. And you were also able to repay further 50K of your mortgage. So now you owe the bank 400K.
Now HELOC allows you to draw your equity upto 80% of the home's worth. So 80% of 700K is 560K. Out of this, you still owe the bank 400K. So with this formula, you could get a loan for upto 160K at very low interest rates. People usually take out HELOCs for things like renovation, or buying another house, or simply to invest, as HELOCs have very low interests compared to personal loan. For example, right now you could get a HELOC at as little as 3-4% per annum, and if invested wisely, you could earn 7-10% easily. So you are net in profit.

Agreed. In addition, you can get another type of LOC - a loan against the equity you already have in your mutual fund/stock/bank deposits. You can use this type of LOC to buy a house from scratch.

 

[Rob_TO]

If you are able to get credit somehow (I got my first mortgage in Canada in less than two years), there is another style mortgage which I personally favour for many reasons.

It's call home equity loan (home equity line of credit). This is an interest only mortgage. You are not required to make any minimum amounts down payments except for servicing the interest on the mortgage. You can also use it like a current account so money in and out is no problem and easy. This means you can pay your full salary into your mortgage and use the money as you need. Interest rate is prob about 0.5 percent higher but with your ability to stash extra cash in there, the offset is well worth it.

Example : $285k mortgage regular over 20 years 3.5% interest $1715 monthly payment
Home equity loan (Interest only) $285k = $831 monthly plus mortgage insurance probab about $50/month.

This reduces your cost of living significantly overall and certainly a better option than just renting, since you get the benefit of equity growth from ownership.

Downside : If you only pay the interest you will never pay off your mortgage.
Upside : if you stash extra cash and savings into your mortgage you effectively earn the mortgage interest rate as apposed to the dismal rates available under GICs

I have used this mortgage style in two countries and probably for over 20 years. Works really well, especially if you are able to manage your money even marginally well.

Good luck

For this kind of product (typically called an All-in-One account in Canada) where the mortgage is treated as a bank account, you must have minimum 20% downpayment to start. Also the interest rates tend to be higher than conventional mortgages, and only end up saving money to those that would be dumping extra money into it. For the majority of people, they are not good products due to the higher interest rate and they end up taking forever to pay off.

 

[miloslj]

Thanks for everything.