I frequently receive calls from individuals seeking advice on how to prepare to qualify for a mortgage once they arrive in Canada. Recently, I provided some guidance to a couple via email, and I thought it would be valuable to share it as a blog post. So, without further ado, here are a few pointers for you.
My general advice is to first - before you even arrive - begin to create your Canadian profile to "normalize" how you appear in Canada to the various agencies, businesses, potential employers, and lenders you will soon interact with. This will serve you well in the months and years ahead. Assuming you are already working on a Work Permit, Permanent Residency, or you're already a Canadian Citizen, here's what I recommend:
- First establish a temporary Canadian address. You will need this for Canadian credit applications and banking. It could be a mail-box service, but better yet a family friend.
- Establish a Canadian telephone number (VOIP.MS) in the region you want to move to, record a greeting, and setup SMS and VM forwarding to your email address. When someone calls your Canadian number, you'll get their message. This might be useful for example in an employment or rental property search.
- Establish a Canadian bank account, use the temporary address and tel# above. The account can be joint if you have a partner or each have one.
- Establish Canadian credit rating ASAP for both you and your partner. Capital One Secured Credit Card or Home Trust Secured Credit card are a good place to start. You will need a Canadian address and telephone#. Learn more about secured credit cards here. Get at least 2 forms of credit for the main income earner and at least one for your partner. (NB: if you get a temporary SIN #s (900 series) before you get permanent SIN#s, make sure to update the credit card companies with your new SIN#s so that your credit history transfers / is not lost.)
- Inquire about filing a Canadian tax return for your current income(s), and what if any taxes would be owed to Canada. If you can file without paying tax, but can record your foreign earned income in CAD$, do it! (March is the earliest you can file for the prior calendar year). Traditional Canadian mortgages are based on income from permanent full-time employment in Canada, or 2 years of Canadian tax filings showing foreign-earned income.
All of the above will set you up to look the best that you can by the time you arrive in Canada. I suggest renting for 6 - 12 to months to take the pressure off and to allow you time to figure out where you want to live and to prepare yourselves for a mortgage.
Meanwhile, you need to sort out employment. Perhaps one of you will continue to work abroad while your family relocates to Canada to keep the income flowing. Once your family is in Canada and you have established residential ties as discussed above, I have a mortgage lender that will provide your with a mortgage using foreign-earned income with 20% down.
Once you have secured this special mortgage, you can transition your employment from abroad to permanent work in Canada. Or, if you are living in Canada with either work permit or permanent residence status, with full-time employment (but not self-employed) and newly established credit history, there are many more mortgage options and better rates under "New to Canada" programs. You will be thankful that you followed all the preparatory advice above!
Here is a link to a longer read called Can I Get a Mortgage in Canada, which talks about many qualifying criteria including important sections on employment and credit.
If you want to initiate a conversation now and talk through your relocation and mortgage planning, please click the link. Welcome!
.jpg)
