Canada: Mortgages

Canadian lending criteria

Do I qualify for a Canadian mortgage?

To qualify for a mortgage in Canada, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete the application form, and Conti won’t charge you for this service.

How much can I borrow?

• Calculation based on the valuation or purchase price, whichever is the lower

• Up to 70% of LTV available for house purchase, remortgage or home improvements, dependant on currency and area of Canada

• Based on joint net “take home” pay, where joint income is applicable

• Existing liabilities, e.g. mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed Canadian mortgage payments and taxes. All this must not exceed 40% of your monthly net income. Note that Canadian lenders may take up to 50% of any proposed rental income into consideration

What evidence of income do I need?

If you are employed:
• Your last 3 month’s payslips
• Your latest P60 and/or Employers Reference
• Your last six month’s personal bank statements

If you are self-employed:
• Your last three year’s audited accounts
• Your last 2 years tax returns
• Your last six month’s personal bank statements.

Example mortgage payments

If, for example, your net joint monthly income is £2,500, 40% of this equates to £1000. If your only liability is your mortgage payment, of say £300, this would leave a balance of £700 for your Canadian mortgage repayment.

What types of Canadian mortgages are available?

For our latest rates and to see the different types of Canadian mortgages on offer, please visit our website or speak to one of our advisers.

• Loans taken out in Alberta, British Columbia, Ontario, Quebec, Whistler, Toronto, or Great Vancouver cannot exceed 70% of valuation or purchase price, for all other areas the maximum is 65%
• The maximum term of any mortgage is 30 years
• Repayment and Interest Only mortgages are available
• The minimum loan you can take out is CN$75,000

Essential information for buying properties in Canada

Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.

• It is of paramount importance to seek independent advice from an overseas solicitor.

• You need to ensure that you will have full title to the property on completion and that you have the appropriate documents available for the lender.

• Take appropriate independent legal advice before signing the sales contract or paying a deposit. The bank will require a copy of this document with the relevant application form. However, you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding.

• You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying a Canadian property. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes are typically between 10% - 15% of the properties purchase price.

• Be aware that the solicitor and/or notary may be incorporating costs for assigning the mortgage within his charges, you should establish the actual cost before proceeding with a loan application.

• All mortgages should have a suitable life assurance policy assigned to them. It is not mandatory but strongly advisable.

• Properties can be purchased either individually or in joint names.

© Conti Financial Services Limited 2008

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on www.mortgagesoverseas.com