Newcomers to Canada: How to get a mortgage and invest in real estate

If you settled in Canada recently and are having difficulty getting financing from large banks, then you might want to look at private lenders for an effective solution.

It’s clear that immigrating is difficult and may require many sacrifices. And it’s frustrating for a newly arrived Canadian who has the financial means to become a property owner or who wants to invest in real estate to have to start back at square one and wait several years before being eligible for financing.

A private mortgage overcomes this obstacle and is simpler, faster and more flexible.

How to get a mortgage without a credit file in Canada

New Canadians who want to own property or launch into real estate investment quickly find out that it may be difficult, or even impossible, to get a mortgage loan from a conventional financial institution. The Canadian credit agencies, Equifax and Trans-Union, which are responsible for collecting credit information, do not consider data from other countries. And since the large banks generally demand a credit file with a history of several years, new Canadians are refused a mortgage, even if they are prepared to make a substantial down payment.

And people coming back to Canada after several years out of the country can also face the same problem.

Thankfully, there is a solution available to people in these situations who want to invest in real estate without having to wait years to rebuild a new credit file here. Since private lenders, like Victoria Financial, are not burdened by the heavy administrative requirements of the large banks, they can work with people who do not entirely meet the typical investor profile.

Private mortgage: A simple, fast and flexible solution for new Canadians

With a private lender, each loan or mortgage is judged on its real value. When you submit a request to a private lender, it’s not a computer that will decide whether to accept it and what the terms will be, as is often the case with the major banks. With a private lender, you deal with a real person.

Since private lenders have more flexible financing policies, they enter into a direct and tangible business relationship with the borrower. This is a big difference from institutional lenders, which require a long credit history as well as an impressive amount of forms, proofs and paperwork.

How do private lenders offer an effective solution to new Canadians and entrepreneurs?

For a new Canadian whose assets are still partly in their country of origin, the big banks’ requirements become a huge puzzle. Even if the person has a down payment of 25%, they must still make sure the amount is in Canada before even beginning the loan request. However, a private lender can adapt to the entrepreneur’s situation. This is where the human side of private banking makes a difference.

The same goes for proof of income. We know that many newly arrived Canadians are entrepreneurs. Unlike salaried employees with stable revenues, these businesspeople have a completely different financial reality. Once again, the private lender can demonstrate good judgement and assess the borrower’s actual solvency, even when a portion of their assets are outside the country.

In short, financial institutions like RBC, NBC, CIBC, BMO and Desjardins, generally seek to serve a typical clientele. These corporations simply don’t have the ability (or the willingness) to adapt to the needs of more niche clients, like new Canadians and entrepreneurs, who want to invest in real estate.

What are the criteria for a new Canadian to qualify for mortgage financing?

To qualify for financing from Victoria Financial, it’s not essential to have a credit file or proof of stable revenue or to fill out tons of paperwork. Naturally, there are some administrative conditions to meet, but here are the three criteria that really matter:

The property is a single-family home, a condo, a commercial or income building, or a lot.

The property is located in a serviced urban area.

You have a down payment of at least 25%. In other words, the private mortgage can cover up to 75% of the property value at the time of purchase.