maxibhoy

I have opened up a new account with Scotia which as a new immigrant offers quite a good deal for a year however upon enquiring about a mortgage I was advised the following -

I need a down payment of 35%.
I am required to deposit 24 months mortgage payments with the bank which they will collect my mortgage from for the next two years.

This does not cause any issue for me but was just wondering if this was normal with most other banks in Canada as a new immigrant.

I am awaiting what other info I need to give in terms of proving affordability etc however the advisor stated that this will be less of a concern to them as by the end of the years I would have plenty equity in my house. I would assume you would still need to shadow affordability beyond the two years.

Can anyone let me what their experience has been.

Thanks

Almost Canadian

It was not normal when I arrived in 2007 but I appreciate that things have changed since then.

Once we put down 35% the bank was happy to lend us whatever we wanted (even though I had no income), at a competitive rate, with no requirement to have to deposit 24 months of mortgage payments with them.

I suggest you speak to someone else (even in the same branch) as with putting 35% down you shouldn't have to put up with what they are proposing as their investment should be safe.

Aqua

When we came we waited 12 months and rented until we looked around for a nice place. When we applied at RBC we put down 20% and they took the amount as normal on a Bi-Monthly mortgage.

Siouxie

Look at the new immigrants buying plans on CMHC

http://www.cmhc-schl.gc.ca/en/hoficl...C-Newcomer.pdf

There is a brief description of how it works here: http://www.ratehub.ca/mortgage-blog/2011/05/205/

I would suggest you go and see a mortgage broker rather than go to a bank.

james.mc

We took out a new mortgage with Scotia in March this year.

It was 35% down. No question about that.
No job (in Canada) either.

We were required to deposit 24months mortgage payment in our account (on top of the required 35% down) however, once the mortgage was approved and funds released, we were free to use the deposited 24months payments as we wished. We bought a Jeep

Aqua

How's living in a Jeep going??

Siouxie

My son and I bought a house 2 years ago - he was a new immigrant, I had no credit rating. Using the 'newcomer to Canada' plan through a broker, we had to supply: confirmation of employment (both), 1 months worth of pay stubs, a letter from our bank stating we were in good standing, copies of utility bills (luckily some were also in my name previously, though I wasn't the main account holder), and 20% downpayment. We got a 2.3% interest rate with a 30 year term.

james.mc

We park it behind our log cabin..... with our older YJ

maxibhoy

Thanks James.

The difference in my case is that the advisor stated that this 24 month deposit would be used to pay my mortgage for the next two years. I.e I would have no further mortgage payments for two years.

When did they release the funds was is at the end of the 24 months or when you drew the mortgage down. What further proof of affordability did they ask for? I would assume that they still need comfort about how you will manage the repayments. Is this not normal.

Thanks

james.mc

Max

The 24months funds were not locked in or anything, they were just sitting in our checking account. Our Realtor said that once the mortgage funds had been transferred to the seller we could do what we wanted with the 24months funds.

I seem to recall that we offered past overseas income evidence but they required no guarantees that we would continue that income stream. Which we have incidentally. We could offer no promise of future income derived within Canada and I feel the mortgage was not offered based on past performance.

I think the 35% down covers them in the current (relatively stable) market. Should it all go pear shaped they are not likely to take a hit.

If you are happy to leave the funds in the account to pay the mortgage then I guess that'll give you a bit of a buffer whilst you settle down. I have no clue how your income stream will be, so you'll no doubt be the best judge of whats best in your circumstances.

maxibhoy

Thanks for the replies all. I think I'll double check with one of the other branches and see if I'm given similar info. It seems from all your replies that what is being offered to me is not the norm. I initially wanted to put down a 50% deposit but the advisor said that the better option was the 35 down with 24 mths security which I don't really agree with.

Aviator

It would be better for them as they get more interest. There is no question, the smaller the mortgage, the better off you are.

james.mc

I can't see any reason why you can't put down anything over 35%.
Not sure of they'd still require 24months on top of that but the advice, sticking with 35% and 24months, sounds a bit odd?

I agree... go and ask elsewhere and get a more balanced view. The people I dealt with at Scotiabank openly admitted that they do so few of these types of 'new immigrant' mortgages each year (across Canada) they had to read the guidance and interpret it as best they could. Local branch experience was very limited. For those reasons you may well get a different story from another Scotiabank branch.

Animal

I bought last September and put 20% and pay normal bi-weekly - I was offered the same from 2 banks (same low rate etc)

They even said I could have put 10% down if I'd have wanted.

I'd use a broker or go to another branch if you really want to use Scotia.

james.mc

Not sure when you landed, but the impression I was given is that a new immigrant (with no job) is required to put a minimum of 35% down plus prove they have extra funds deposited to pay the mortgage for a specified period. In the case of Scotiabank they wanted 24months proof of funds over and above the 35% down.

Here is another link that paints a similar picture for new immigrants.

Terms and conditions may vary from financial institution to institution, but I suspect the 35% down is becoming a Canada wide finance institution requirement for new immigrants with no job.

Generally speaking, if you can show that you have been working in Canada for two years and you can afford 20% down you'll likely qualify for a “conventional” mortgage as opposed to a 'new immigrant' mortgage.

If anyone sees it differently, throw it into the pot