Most potential buyers do not have sufficient funds to pay the full price of the acquired property, and apply to financial institutions for private home loans. Financial institutions in Canada adhere to certain rules when considering requests for private loans to purchase real estate. These rules are similar in various financial institutions, but not identical, their framework is quite extensible. Only properly designed by the lawyer document will be able to convince the bank to provide the private loans of maximum amount for the client.
The private home loans are given to non-residents of Canada on the same terms as to the citizens of Canada, but the first installment is 35% or more. In some cases, it is possible to achieve application of total amount of 30% or even 25%. Until recently, for the private home loans, from the buyer the non-resident without the status required only proof of presence of scrip for the first installment (35%) in any bank in the world. Currently, the requirements have become tougher – the creditors, in most cases, require the proof of legal origin of the first installment for the home loans, as well as documents confirming the amount of personal income of the client.
The private home loans are given for up to 25 years at fixed contract conditions. The most common repayment plan of the private home loans is the constant payments, in which the home loans are repaid in equal periodic payments for a certain period of time – “amortization period”.
Usually payments are received during the full amortization period – 25 years (300 monthly payments).
In addition to the basic amortization period specified in the contract (25 years), the client by himself (based on his wishes, capabilities and goals of purchase) selects the intermediate deadlines of the contract with the bank for the renegotiation of contracts. It may be 3 or 6 months or 1, 2, 3 … and to 25 years.
In recent years, have propagation the loans with variable rates. For such loans the interest rate for the term of the contract between the creditor and the customer «tied» to the current bank prime rate, the same in a certain time for the majority of Canadian banks.
Creditors guarantee for the term of the contract with the customer a percentage which is usually below the prime rate. In this case, the banking percent lower than the lowest percentage in the other embodiments, but it is necessary to monitor over jumps index and regulate the payments under the contract signed with the bank. It requires certain knowledge and skills. The client reserve the right change the terms of a loan on a fixed percentage at any time of the contract. The propositions of the program are constantly updated.
Financial institutions make it possible to accelerate the repayment of the loan. In the simplest form – the longer you use the borrowed amount, the greater the percentage you will give away.
Adrienne Maxwell, the expert in the questions of private home loans in Toronto is telling about the process of loans for non-residents of Canada and gives tips to make this process more convenient.