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Queries about downpayment related rules in Canada

Discussion in 'Housing' started by turb, Oct 7, 2019.

  1. I'm a newcomer to Canada and I'm planning to buy a house sometime down the line in Ontario. While browsing through various websites and consulting with a few realtors, I came across various legal requirements that one must fulfill in order to be approved for a mortgage.
    1. For newcomers, is there a stricter requirement of providing a higher proportion of downpayment (>20%) in absence of a 2-year old credit/tax history?
    2. Is there any aging requirement of how long the downpayment money should be available in a Canadian bank account before the mortgage application? I read that lenders prefer that the money be at least 30 days in the account before the approval.
    3. What if the downpayment amount is to be given as a gift? Does it require similar aging in a Canadian bank? Also, lenders may require upto 90 days of bank statements of the person providing the gift (especially if the money is sourced from outside Canada)?
    4. Are gifts from in-laws considered as valid?
    5. What are the types of stress test that lenders typically perform on a mortgage application?
    Appreciate if someone can help answer these queries or tell me who would be the best person to answer these queries? Would it be a mortgage broker? Or an accountant?
  2. Would visit a mortgage broker. Stress tests make you qualify at a higher rate so if the rates go up you should be able to afford your mortgage on your current salary. Obviously you also have to determine whether you can afford payments because you often buy a house when both partners are working and often before children. Things like the cost of daycare or not being in full employment for various reasons (maternity leave, job loss, illness, family issue, etc.) aren’t taken into account.
  3. You can consult with your bank too. They have mortgage advisers and your bank knows your situation better. If the bank cannot finance then mortgage brokers will have more options.
  4. There are private lenders that can help.
  5. Bank may not offer you the best rate. Would shop around for the best rates.

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