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Newcomer's guide to buying a home |
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Page 4 of 4
Will you get a mortgage?
Financial institutions have pretty stringent rules when it comes to
lending money. To qualify for a mortgage, you will need to meet certain
requirements, the most important of which are listed here:
Credit history: It is crucial to start building a Canadian credit
history from the moment you arrive in the country. If possible, every
working member of your family should have his or her own credit card
(not a supplementary/linked card).
Employment history: Having a steady job, or a consistent
record of working in Canada is essential for you to be able to apply
for a mortgage.
Debt Service Ratio: Financial institutions have certain guidelines when
determining how much to lend a prospective home-buyer. The most
commonly used one is the Gross Debt Service Ratio which, simply put,
compares the total cost of your monthly mortgage payments, taxes and
heating to your gross
monthly family income. If these payments exceed 32 per cent of your
gross (pre-tax) income, your mortgage application could be turned down.
If you have any other debts such as monthly car payments or credit card
loans, the financial institutions will also take into account your
Total Debt Service ratio. This takes into account the total of your
monthly mortgage, taxes, heating plus other debts and should not exceed
40 per cent of your gross monthly income.
Related: Find a mortgage broker.
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