Buying a house
 

Hello, just after a bit of advice/ info, due to a possible lack of rental properties in where we are moving to, we are now looking to buy a bit earlier than we had planned for, so basically how receptive are banks( I am with CiBC) in Canada to lend to PR's with no real credit history, but with $30,000 to put towards a house, thanks

Re: Buying a house
 

Depends on many factors such as a salary etc, but in Canada you're looking at 20% down (I think) for most lenders so that gives you a property of $150k.

I haven't bought a house yet I might add, so my comments may not be wholly reliable ...

Re: Buying a house
 

The 20% rule is true to an extent and applies to Banks because of the law. Banks get around this and borrowers can put down considerably less, but the mortgage will need to be insured for default. The insurance costs can be added to the mortgage.
I suggest the OP approach the CIBC and apply for a pre-approved mortgage. This will determine if that bank is willing to help him and what prices of houses he can look at, knowing that the bank will provide mortgaging.
Banks, of course, are not the only lenders and there are plenty of private mortgagees out there. A real estate agent will have contacts in that regard.

Re: Buying a house
 

The main thing is your income.

You can start with as little as 5% down so a $30,000 down payment could, in theory, get you into a $600,000 house. As said above, if you have less than 20% to put down you will have to pay a default insurance premium. This is usually added to the mortgage.

You are not allowed to spend more that 32% of your gross monthly income on housing: mortgage + property tax + heating + half of condo fees (if any). The mortgage element of the above is the payment required for the bank's standard 5 year fixed mortgage. This is the case even if you negotiate a lower variable rate.

For example, if your joint gross income is $100,000 you can borrow approximately $410,000. At $80,000 joint income you can borrow approximately $310,000 (all at currently available interest rates). You would need a joint income of $132,000 pa to afford the $600,000 home.

Some banks will waive these qualification rules if you put down at least 35% of the fair market value of the home, but with $30,000 this will only apply to homes up to $86,000.

Re: Buying a house
 

Thanks for the replies so far, I am looking at $250,000 very top end of budget, I do'nt have a job to go too ( just waiting to finish some courses) but I will be in receipt of a pension, dependant on exchange rate, of approx $1000 a month, I guess an e-mail to CiBC to test the water on Pre approved Mortgage's for PR's is next on the ever increasing to do list!

Re: Buying a house
 

That will get you a small town house in the GTA.

Where are you moving to?

Re: Buying a house
 

What mortgage can you afford with approx $350 payments? Because if the banks follow the rules, that's what you'll get.

Re: Buying a house
 

Maybe I'm having a brain-dead Sunday evening but can you explain how you've calculated that please?

Re: Buying a house
 

Moving to Labrador city NL, the pension would, I hope be the majority of the mortgage monthly payments. I would then have to make up the difference from my wages, gone are the days when a forces pension was enough to get by( wonder if CiBC do ex forces discount?)

Re: Buying a house
 

I hope you know what you're doing by selecting Labrador City as a place to settle. It's quite an unusual choice. :blink:

On the upside, property is very cheap there, (for a reason).

Re: Buying a house
 

$100,000 pa income = $8333 per month. 32% = $2,667.

Now assume $300 pm property taxes and $200 per month hydro/natural gas, this leaves you $2,167 to service a mortgage. Assuming 4.45% interest rate and a 30 amortization term the maximum mortgage you could qualify for is $418k. I am being a little conservative.

Re: Buying a house
 

Not as cheap as you would think - the mining boom in that area has led to a shortage of housing and rising prices. MLS only shows 15 properties for sale total, ranging from $179k to $339k. http://tinyurl.com/5tqzyhq

Re: Buying a house
 

Reason for going to Lab city is the wife has family there and the job market looks healthy in the town, as for knowing what I am doing, well it is a gamble but probably like most people on here it's question of giving it the best chance we can and if it does'nt work out then we tried and we learn and move on, either back to Blighty or some where else, my family all seem up to the adventure(apart from the eldest, she is staying here) and the other 2 are looking forward to meeting cousins/aunts/uncles that they have never met

Re: Buying a house
 

One route you may also want to explore is to contact a mortgage broker. Not knocking the banks, but they have to follow their own guidelines whereas a broker has access to a wide variety of lenders and I have found that a good one can get creative and tend to think "outside the box."