Lending to emigrants in Canada

June 14, 2024

Canada is one of the most attractive countries for emigrants due to its stable economy, high standard of living and multicultural environment. However, getting a loan for new emigrants can be challenging as they need to establish a credit history in a new country. Let’s take a look at the main aspects of emigrant loans in Canada.

The main types of loans are

1. Property loans

  • Mortgages for new immigrants. Many banks and credit unions offer mortgage programmes specifically for new immigrants. These programmes often take into account a lack of credit history in Canada, but require proof of income and stable employment.
  • Down payment loans. Some banks provide loans to cover the down payment, making it easier to buy a home.

2. Car loans

  • Car loans are available through banks, credit unions, and car dealers. Immigrants can take advantage of specialised programs for car purchases that take into account their financial history outside of Canada.

3. Personal loans

  • Personal loans can be provided for a variety of purposes, such as home renovations, medical expenses or education. Banks offer flexible terms and conditions, taking into account the borrower’s financial situation.

4. Credit Cards

  • Credit cards help build credit history in Canada. Many banks offer starter credit cards for new immigrants, which may have lower limits and high interest rates, but are an important step to build a credit rating.

Terms and requirements

1. Credit history

  • A major challenge for new immigrants is the lack of credit history in Canada. Banks may consider credit history from the country of residence if international credit reports are available.

2. Proof of income

  • Having a stable income is an important factor. Employers can provide employment and income letters that will be considered when reviewing a loan application.

3. Down payment

  • Mortgages and auto loans require a down payment, which can vary depending on the type of loan and financial institution.

4. References

  • Banks may require references from previous employers or landlords to assess the reliability of the borrower.

Programmes for expatriates

1. Newcomer to Canada programmes

  • Banks such as RBC, Scotiabank and BMO offer special programmes for new immigrants that include home loans, credit cards and personal loans with simplified requirements.

2. Credit Unions

  • Credit unions can offer more flexible terms and personalised services for new immigrants. Programmes may include financial planning advice and assistance in establishing a credit history.

3. Government programmes

  • The Canadian government and provincial governments may offer a variety of support programmes for immigrants, including subsidies and benefits to help with adjustment.

Tips for new immigrants

1. Establish a credit history

  • Start by opening a bank account and getting a credit card with a low limit. Making regular and on-time payments will help build a good credit history.

2. Use credit unions

  • Credit unions can offer more favourable terms and personal service to help you adjust more quickly to Canada’s financial system.

3. Look for specialised programs

  • Research the offerings of banks and other financial institutions to find programmes designed for new immigrants.

Conclusion

Obtaining credit in Canada for new immigrants can be a challenge, but with the right approach and utilisation of available resources, it becomes possible. It is important to actively build a credit history, take advantage of special programmes for immigrants, and consult with financial professionals to successfully adjust and achieve financial goals.