New Canadians are making their numbers felt in the housing market as they settle and transition from renter to owner.
In the first three months of 2023, the country’s population grew by more than 290,000 or 0.7 percent, the highest growth rate in the first quarter since at least half a century, when comparable data was available in 1972.
Year-over-year, as of the second quarter of 2023, Canada saw an increase of more than 1.2 million people, according to Statistics Canada.
Statistics Canada estimated that the country’s population had surpassed 40 million.
As a mortgage broker in Kamloops, I have seen firsthand for these new Canadians, first-time homeownership may prove harder than anticipated as they face some unforeseen obstacles, but there are definite opportunities.
Lack of Credit History
The biggest challenge for new Canadians is establishing credit because they do not have a financial history in Canada.
Without a credit history, getting mortgage financing can be a struggle. It is important to start establishing credit soon after arrival in Canada. New residents are encouraged to bring credit and bank references (preferably in English) from their home country to help develop a Canadian credit profile.
Established Residency
Foreign workers and international students who have lived in Canada for extended periods and were “demonstrably working toward permanent residency” would be allowed to purchase homes, as they might otherwise face “a more difficult or prolonged transition to Canada” with fewer housing options.
It would be up to those individuals to prove they meet the requirements for the time spent in Canada.
The Act and Regulations provide exceptions, including for the following persons:
Temporary residents studying in Canada if they:
- Are enrolled in a program of authorized study at a designated learning institution as defined in the Immigration and Refugee Protection Regulations and
- Have filed income tax returns for each of the five taxation years preceding the year in which the purchase was made and
- Have been physically present in Canada for a minimum of 244 days in each of the five calendar years preceding the year in which the purchase was made and
- Have not previously purchased a residential property in Canada while the prohibition is in effect and
- Purchase a property for a price not exceeding $500,000
Temporary residents working in Canada if they:
- Hold a valid work permit or are authorized to work in Canada and
- Have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase and
- Have not previously purchased a residential property in Canada while the prohibition is in effect
Refugees, if they:
- Have been given refugee protection, or are a protected person under the Immigration and Refugee Protection Act
Refugee claimants and individuals fleeing international crises if they:
- Have made a claim for refugee protection in accordance with the Immigration and Refugee Protection Act if that claim has been found eligible and referred to the Refugee Protection Division or
- Have received temporary resident status in accordance with the Immigration and Refugee Protection Act based on humanitarian public policy considerations to provide a safe haven to those fleeing conflict
Accredited members of foreign missions in Canada if they:
- Hold a passport that has a valid diplomatic, consular, official, or special representative acceptance issued by the Chief of Protocol of Canada
Non-Canadian spouses and common-law partners, if they:
- Purchase residential property in Canada with their spouse or common-law partner who is a Canadian citizen, a person registered under the Indian Act, a permanent resident or a non-Canadian for whom the prohibition does not apply.
Section 35 Rights – Indigenous People and Communities
The Regulations clarify that the prohibition doesn’t apply if it conflicts with the rights recognized and affirmed by Section 35 of the Constitution Act, 1982.
Section 35 recognizes and affirms the existing Indigenous and treaty rights of Indigenous peoples of Canada. These may include ownership rights to land, rights to occupy and use lands and resources, land to be set aside for First Nation use only, self-government rights and cultural and social rights.
Exceptions for Certain Types of Property
The Regulations include an exception for any residential property outside of a Census Metropolitan Area (CMA) or Census Agglomeration (CA) as identified in Statistics Canada’s Standard Geographical Classification 2021.
CMAs and CAs are formed by one or more adjacent municipalities centred on a population centre or the core.
A CMA must have a total population of at least 100,000, of which 50,000 or more must live in the core, and a CA must have a core population of at least 10,000.
If you are new to Canada and would like to purchase your first home, seek independent legal advice on your purchasing status.
To start preparing to apply for a mortgage, the following materials should be assembled:
- Copies of your work permit/landed status papers or passport
- Social insurance number
- Employment letter(s)
- Credit reference(s)
- Documentation of the down payment money source
- Bank statements showing 90 days of account activity
There is good news. As your mortgage broker in Kamloops, I can streamline the mortgage process for new residents to Canada, from counselling on credit in Canada to obtaining credit references from foreign banks to confirming foreign income; a broker can work with new to Canada clients to present their financial history to the lender’s satisfaction.
Purchasing your first home can be a stressful situation. It can be beneficial to seek a mortgage broker’s advice with access to various lenders and products that will fit your situation. Are you purchasing, renewing or refinancing? Let’s talk today!
