Canadian mortgage - 90 day parking rule

[moscatojuices]

Hey everyone, I put an offer for a house in Regina for $220,000 with a 20% down payment and it was accepted (so $44k excluding closing costs).

I currently have $50k in my BMO chequing/savings accounts and $40k in my unregistered investing account in ETFs.

However, of the $50k referenced above, only $20k has been sitting in my BMO accounts for 90 days, and the BMO loan officer was concerned about that. The balance of $30k is from my Canadian salary and also foreign remittances from my accrued wealth in the UK (business income, rent income, investment income etc.)

Obviously we as immigrants bring a financial life and accumulated savings from our home countries and merge it into our Canadian wealth.

I don't understand how to allay the bank's concerns about this, should they raise an issue about it. I don't want to show them my foreign bank statements because there is also foreign credit card debt/stock loans which I repay based on my wealth and regular business income back at home.

Any thoughts are appreciated - don't want to lose this awesome house I bought all because the financing fell through.

 

[Mounat]

What in God's name is a 90-day parking rule? There's a bank that otherwise approved you for a mortgage but wants to see your down payment in an account for 90 days? Why? If there is such a rule, why don't you just wait the 90-days and tell the seller about your situation?

I think I've been gone from Canada for too long.

 

[moscatojuices]

What in God's name is a 90-day parking rule? There's a bank that otherwise approved you for a mortgage but wants to see your down payment in an account for 90 days? Why? If there is such a rule, why don't you just wait the 90-days and tell the seller about your situation?

I think I've been gone from Canada for too long.

Thank you for your response. For your education - https://www.easy123mortgage.ca/everything-you-need-to-know-about-proving-your-down-payment/

It's basically to deter suspected money laundering. In a property transaction no seller in the world would wait 90 days for a buyer to sort their own shit - a seller is motivated to sell and have assurance of receiving monies so they can carry on with their life (upgrade to a bigger home, cash out equity to improve quality of life or whatever purpose). That would be SHEER MADNESS.

My bank BMO hasn't approved me for a mortgage yet - they have flagged a preliminary concern that all of the downpayment amount (outside of the amounts stated in my post) haven't sat in my account for 90 days. This would mean showing enormous amounts of wire transfers to prove the legitimacy of the source of funds, and then them starting to see credit card and investment loan interest payments that I don't want BMO to know about because it starts the process of trying to unscramble an egg.

 

[steaky]

Thank you for your response. For your education - https://www.easy123mortgage.ca/everything-you-need-to-know-about-proving-your-down-payment/

It's basically to deter suspected money laundering. In a property transaction no seller in the world would wait 90 days for a buyer to sort their own shit - a seller is motivated to sell and have assurance of receiving monies so they can carry on with their life (upgrade to a bigger home, cash out equity to improve quality of life or whatever purpose). That would be SHEER MADNESS.

My bank BMO hasn't approved me for a mortgage yet - they have flagged a preliminary concern that all of the downpayment amount (outside of the amounts stated in my post) haven't sat in my account for 90 days. This would mean showing enormous amounts of wire transfers to prove the legitimacy of the source of funds, and then them starting to see credit card and investment loan interest payments that I don't want BMO to know about because it starts the process of trying to unscramble an egg.

Incorrect. In a property transaction there are seller in the world wait 90 days for a buyer to sort their own shit - a seller is motivated to sell and have assurance of receiving monies so they can carry on with their life (upgrade to a bigger home, cash out equity to improve quality of life or whatever purpose). That's SHEER MADNESS as you described.

 

[Mounat]

Thank you for your response. For your education - https://www.easy123mortgage.ca/everything-you-need-to-know-about-proving-your-down-payment/

It's basically to deter suspected money laundering. In a property transaction no seller in the world would wait 90 days for a buyer to sort their own shit - a seller is motivated to sell and have assurance of receiving monies so they can carry on with their life (upgrade to a bigger home, cash out equity to improve quality of life or whatever purpose). That would be SHEER MADNESS.

My bank BMO hasn't approved me for a mortgage yet - they have flagged a preliminary concern that all of the downpayment amount (outside of the amounts stated in my post) haven't sat in my account for 90 days. This would mean showing enormous amounts of wire transfers to prove the legitimacy of the source of funds, and then them starting to see credit card and investment loan interest payments that I don't want BMO to know about because it starts the process of trying to unscramble an egg.

Very useful link with sufficient details. I wonder if all cash purchases (no loan) require similar scrutiny. It seems to me this can quite easily be gamed. And yes, if the market is hot, a seller has no incentive to wait so it depends.

Good luck.

 

[iSaidGoodDay]

Hey everyone, I put an offer for a house in Regina for $220,000 with a 20% down payment and it was accepted (so $44k excluding closing costs).

I currently have $50k in my BMO chequing/savings accounts and $40k in my unregistered investing account in ETFs.

However, of the $50k referenced above, only $20k has been sitting in my BMO accounts for 90 days, and the BMO loan officer was concerned about that. The balance of $30k is from my Canadian salary and also foreign remittances from my accrued wealth in the UK (business income, rent income, investment income etc.)

Obviously we as immigrants bring a financial life and accumulated savings from our home countries and merge it into our Canadian wealth.

I don't understand how to allay the bank's concerns about this, should they raise an issue about it. I don't want to show them my foreign bank statements because there is also foreign credit card debt/stock loans which I repay based on my wealth and regular business income back at home.

Any thoughts are appreciated - don't want to lose this awesome house I bought all because the financing fell through.

I am sort of in the market for a home and wanted to ask a few quick questions. Couldn't DM you as your profile doesn't allow me to do it. Can you drop me a message so that I can ask you a few questions?

 

[steaky]

I am sort of in the market for a home and wanted to ask a few quick questions. Couldn't DM you as your profile doesn't allow me to do it. Can you drop me a message so that I can ask you a few questions?

Couldn't you create a new thread and post your questions?

 

[iSaidGoodDay]

Couldn't you create a new thread and post your questions?

A little bit more personal questions directed at the user. So thought asking over a DM would be better.

 

[moscatojuices]

A little bit more personal questions directed at the user. So thought asking over a DM would be better.

Ask away

 

[Peacekeeper87]

Incorrect. In a property transaction there are seller in the world wait 90 days for a buyer to sort their own shit - a seller is motivated to sell and have assurance of receiving monies so they can carry on with their life (upgrade to a bigger home, cash out equity to improve quality of life or whatever purpose). That's SHEER MADNESS as you described.

You may be confusing this with a 90 day (Or X number of days) conditional period for a buyer to do their due diligence and get ready to close on a transaction. @moscatojuices is correct. As part of anti money laundering schemes and FINTRAC compliance, banks are allowed to disregard any monies that have been sitting in a bank account for 90 days or less for the purpose of downpayment, or ask of evidence of legitimate origin. They are called "unseasoned funds".

As a Realtor I deal with these things 2-3 times a week with first time homebuyers who receive gifted money from family, or newcomers who transferred money from overseas. That's why I always recommend to transfer money asap, and let it sit in the account for 3 months.

 

[steaky]

You may be confusing this with a 90 day (Or X number of days) conditional period for a buyer to do their due diligence and get ready to close on a transaction. @moscatojuices is correct. As part of anti money laundering schemes and FINTRAC compliance, banks are allowed to disregard any monies that have been sitting in a bank account for 90 days or less for the purpose of downpayment, or ask of evidence of legitimate origin. They are called "unseasoned funds".

As a Realtor I deal with these things 2-3 times a week with first time homebuyers who receive gifted money from family, or newcomers who transferred money from overseas. That's why I always recommend to transfer money asap, and let it sit in the account for 3 months.

No, you misunderstood what we were saying and I stand correct (while @moscatojuices is incorrect). Banks doesn't ask for evidence of legitmate origin as it is self explanatory especially if one wire transfer from a legit source.

As a realtor, why would you care whether the money sit in the account for 3 months? Isn't the buyer always have to transfer the money in the lawyers' or notary public's trust account?

 

[Peacekeeper87]

No, you misunderstood what we were saying and I stand correct (while @moscatojuices is incorrect). Banks doesn't ask for evidence of legitmate origin as it is self explanatory especially if one wire transfer from a legit source.

As a realtor, why would you care whether the money sit in the account for 3 months? Isn't the buyer always have to transfer the money in the lawyers' or notary public's trust account?

I just re-read your comment, misunderstood your intention and what you were trying to say. Apologies. Yes there are a lot of sellers who have no problem waiting 90 days while buyer sorts out their things, especially in the current slow market conditions.

OP is incorrect indeed about no seller would want to wait 90 days.
OP is correct about the 90 days seasoned funds rule.

Regarding your information on banks asking for evidence:

1/Banks (often) DO ask for evidence of who provided the money, especially if it's above 10,000CAD received within the last 90 days, and especially if it's from outside Canada. The fact that it's a wire transfer from a known bank or bank account doesn't legitimize the money. It's not self explanatory, as a wire transfer from a known account doesn't actually prove that the money came from a legitimate source. For all they know, it could've come from the uncle who runs a drug cartel. (overkill of an example but you get my point).

How strict lenders will be will differ from one lender to another, the amount, the country of origin, etc.... TD for example is extremely strict, going as far as asking for bank statements of the person who gave you the money. HSBC or RBC on the other hand, usually a simple gift letter will do.

-If it came from your own savings bank account from overseas, no problem, they could for example ask for bank statements from that account to confirm. If they feel something fishy is going on; they can ask for more evidence.
-If it's a gift, no problem, they'll ask for a gift letter from the person who gave the gift to confirm that they do not expect repayment.
It's basic basic FINTRAC/AML compliance.

2/As a Realtor, it's no me in particular who cares. Although I do care to some extent because I want the deal to go through... But It's the mortgage broker/specialist, and the lenders who care the most. It's my job to accompany buyers and educating them on their obligations and expectations in the entire buying process, and that includes preparing them for the initial financial steps, so that their home buying process is successful.

I do this especially for first time home buyers who recently came to Canada, and often tell them about the 90 day funds seasoning rule. I did have a deal fall through because buyers were not able to provide documentation on time to confirm the legitimacy of a $30,000 gift they had received from their parents by proxy through someone else (Foreign currency restrictions from country of origin). They asked for bank statements from all parties involved. 5 days conditional period wasn't enough time to do that, and sellers were not willing to extend. Because of that, the bank disregarded that amount is if it wasn't there, and made their "usable" money fall below the minimum down payment required for that transaction. (Which was 20% for that house, due to it being above the $1,000,000 mark). Financing condition wasn't satisfied, so we needed to back out of the deal. They were better prepared for the next one, and all went well.

Way before the money gets to the lawyer, there are many steps that are done. One of them is applying for a mortgage approval, which in itself includes a downpayment funds verification by the lender. They review not only how much money you have now, but also any large transfer done within the last 90 days. If they see that there is a large transfer received within the last 90 days, they CAN inquire about it. What they actually ask for is a case-by-case thing. Depends on the amount, country of origin, one transfer vs. multiple transfers, etc... The money is transferred to the lawyer on closing day, way after all verifications are done.

Hope this clarifies.