Blog 4 - Getting a mortgage in Canada

Five big banks in Canada

In Blog 3, I shared my perspective about the pros and cons of renting and owning a house. Not unless you can afford to buy a house, then you don’t need a mortgage.

First, you must have a full time job. Some banks require at least 6 months of continuous employment and proof that you’re no longer probationary.

Second, you must have credit history or credit score. In Canada, there are credit bureaus (Equifax and Transunion) that keep a record of all your financial borrowing whether active or paid. This includes credit cards, car loans and line of credit. Based on your credit dealings, the credit bureaus can generate your credit score. The acceptable credit score for most banks is 680. The higher your credit score, the better.

In case you don’t have yet a credit score, some banks will accept a letter from your landlord stating you pay your rents on time.

Unlike in the Philippines, there is no credit bureaus. You must take a good care of your credit score because if you have a good credit score you can negotiate with the interest rate whether a mortgage or car loan.

The third thing you need to get a mortgage is down payment. Most banks require a minimum of 5% down payment. So if you’re buying a $200,000 house, your required down payment is $10,000.

The fourth thing you need is the closing cost. Usually banks calculate the closing cost at 1.8% of your house value. Closing cost is basically the legal fees involved in the transaction of your mortgage.

These are the typical requirements of most banks. Some banks will offer life insurance to mitigate the risk. Some banks will lower your interest rate to partially off-set the cost of the life insurance.

Also banks are not the only source of mortgage in Canada. There are quasi-banking institutions that provide mortgages, too.

I would suggest to get a mortgage pre-approval from the banks. In this way you will have an idea of how much you can afford. Mortgage pre-approval is free.

Be practical in choosing a mortgage and live within your means.

Comments

Blog 3 - Renting vs. Buying (or mortgage) a house

In Blog 2, I hope I was able to provide you an idea with regards to the cost of living in Canada based on my actual experience. Now, let me share my thoughts about renting or buying a house. Your rent is basically your expense in an apartment. You might incur extra $100 for water and electricity if it’s not included in your rent and another $100 for cable and internet. You don’t need to worry about maintenance, your landlord should be responsible for it. Also, if you own a car, you have to pay extra for parking. When you buy a house, you should add at least 50% on top of your mortgage payment. This consists of the following: 1. $200 for hydro/electricity. This amount will depend on the size of the house. The bigger the house the higher your bill especially during winter. 2. $200 for property taxes. This amount is dependent on the size of the house. The amount that I mentioned here is based on a $200,000 house. Property taxes usually increase every year. 3. $100 for water, wa...

Blog 2 - The Cost of Living in Canada

The map of Canada I've been living in Canada for over 15 years now and haven't gone back home since then. I can say that I can give you an idea of the cost of living here in Canada in case you're planning to move here. First of all, you need to know how much is the minimum wage in Canada. Every province has its own minimum wage and here in Manitoba where I live (one of the provinces of Canada), is almost $12 per hour. Basically, this will give you a monthly net income of $1,400 to $1,500 per month. The deductions in your paystub will be roughly 30%. This will typically consist of employment insurance, taxes, pension and health insurance premium (if any) just to name a few. Isn't health care in Canada is free? The answer to that is yes and no. Health care is not really free because you pay it somehow through your taxes. You don't need to worry about the doctor and hospital bills. But for your medications, dentists, vision health, these are not covered by health care...

Blog 5 - Should you migrate to Canada if your life in your country is already good?

This will be a very contentious topic. I’m not here to argue but to share my own views and hoping my views will enlighten you. Before I migrated to Canada, I was working in a bank as loan staff in the Philippines for 7 years, I was still single and just completed my MBA from the University of City Of Manila. I can say I have a good and stable job and well educated in my own country. I decided to migrate to Canada to start a family and hoping for a brighter future for my children and because of the health care system. I accepted the fact that if I migrated to Canada, my banking career will be gone and all my educational attainments will not be recognized. All of these were explained during the orientation for immigrants. I know everyone has their own reasons why they migrated to a different country and I will not be able to cover every reason. In the Philippines "colonial mentality" very prevalent. It's a mentality of some Filipinos where other nations are superior and ...

Helter Skelter Blogger

Search This Blog