Avoiding common homebuying mistakes can make your transition to Canada that much easier. When Charles Waterman was finally able to purchase his first home in Canada, he was thrilled. “It was a feeling of accomplishment and satisfaction,” says the native Barbadian. “It gave me a sense of pride to live among other homeowners in Toronto.”
Now a real estate agent, Waterman helps other new Canadians become homeowners. In his line of work, he’s seen immigrants make the same errors as they search for their first property. Here’s his advice on how to avoid common mistakes new Canadians make when entering the real estate market.
Relying on outdated information
It’s a great idea to ask friends and family living in Canada for advice on the homebuying process, but keep in mind their knowledge may be out of date. “Many new Canadians rely on information from friends and family that have lived here a long time, not current information,” says Waterman. “Several years ago, new immigrants had to put down 35 per cent on a home, but today mortgage insurance allows new Canadians to put down as little as 5 per cent.”
Familiarize yourself with current mortgage regulations by contacting a local mortgage professional before starting your home search. Citizenship and Immigration Canada’s website is also a good source of up-to-date information for new homebuyers.
Overlooking benefits to new Canadian homebuyers
There are several assistance programs available to new Canadian homebuyers. For example, the federal Home Buyers’ Plan allows first-timers to withdraw up to $25,000 per year from a Registered Retirement Savings Plan (RRSP) to put towards the purchase of a home. “A new Canadian homebuyer can deposit funds into an RRSP for 90 days before buying a home and receive a tax benefit,” Waterman says.
Newcomers may also be also eligible for the First-Time Home Buyer’s Tax Credit, as well as other assistance programs that make buying a home more accessible.
Thinking it’s too hard to build credit history
“You can find a house you love and even if you have the money to put towards a down payment, you need to have established credit in Canada in order to qualify for a mortgage,” says Waterman. Some financial institutions don’t acknowledge international credit reports, which can make it difficult for newcomers to secure a Canadian credit card when they arrive. However, there are steps you can take to build your credit history in Canada. Demonstrate your financial reliability by opening a Canadian bank account and using it regularly. Paying down department store credit cards, car leases and other small loans also help show lenders that you’re able to make consistent payments.
Assuming a Canadian mortgage is out of reach
“New immigrants may believe that they’re unable to get a mortgage at all because they haven’t worked long enough in Canada,” Waterman says. But that’s not always the case. According to research conducted by Genworth Canada, more than half of new immigrants polled had successfully purchased a home within three years of arriving in Canada. If you have proof of a steady job, you moved because of a job transfer, or you’re working in the same field as you did in your home country, you may be eligible for a mortgage sooner than you think. Contact a local mortgage professional to discuss your options.
Source: Jennifer Goldberg, Homeownership.ca