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Mortgage Advice….

As much as I can, bearing in mind I’m not a fully qualified specialist, I have tried to answer a couple of questions I had emailed to me today, about buying property out here. I thought it might help others.

Hi Mark,

I am hoping to emmigrate to the Vancouver area, probably the Port Moody area, as the prices are slightly cheaper, (any thoughts or advice? I have 2 kids, 7 and 5 and hope to move to a family oriented area), and am trying to find the best way to finance a purchase.

Chris Deakin, UK

PS. Keep up the blog, and don’t worry about the spiders!

Hi Chris

It’s good to know some people are reading the blog and the newsletter!

Let us first assume you are offered “Landed Immigrant Status”. If you accept that, and you and your family move to Canada, and live here 3 years, you may consider taking out your Canadian Citizenship. While you are “Landed”, you have all the rights of a Canadian Citizen except you can not vote. You do not have to become a citizen, but if you are to spend the rest of your life here, you might consider it.

Now, if you are “Landed”, a bank knows you have been processed by the RCMP for criminal records, and that your references have been processed for character checks. Given that, there are a few options for obtaining a mortgage.

1. If you put 40% of the purchase price or appraised value of the home as down payment, you would be virtually approved by any bank in town. Nobody walks away from that sort of down payment, you have good character (accepted by the Immigration Department) and will obviously find some way to make your mortgage payments. You don’t even need a job for this situation.

2. If you put 25% down, you would apply for a “conventional” mortgage. You would have to prove your ability to make the payments and that means you have to have a job or some sort of verifiable income..

3. If you put less than 25% down, you would apply for a “high ratio” mortgage, and the banks all require your mortgage to be guaranteed by an insurance company against your default in payments. Depending on the amount of your down payment, the insurance company will charge you up to 3.5% of the mortgage amount, (this insurance fee can be added to the mortgage required), and you still have to prove ability to make the payments.

4. If you are not accepted as a “Landed Immigrant”, things get a little stickier. Anyone from any country may own real estate in Canada, and they don’t have to live here. However, if you are borrowing money from a Canadian bank to buy a home, I think they would like you to live in it.

Most Canadian mortgages are written with a 25 year amortization, terms from 1 to 5 years (open terms are also available, but fairly risky and I wouldn’t recommend them), interest calculated semi-annually not in advance. If you go to the RE/MAX Sabre site, click on “MORTGAGE INFO”, there is a calculator there for monthly or semi-monthly payments.

Hope this helps, get in touch if I can help further.

Take it easy,

Mark

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