Mortgages New Brunswick

Frequently Asked Questions About Mortgages in New Brunswick

Do I qualify for a mortgage in New Brunswick?

Qualifying for a residential mortgage in New Brunswick is a matter of finding a lender who will work with your particular financial circumstances. Several factors determine your eligibility for a mortgage and the size and type of mortgage you can get:

• Your income
• Your credit score
• The size of your down payment
• Your existing debts
• Your savings or other assets

You will need to be able to provide documentation on all of these factors, as well as ID and proof of address when you apply. Each lender will then have their own criteria for deciding whether you pass their approvals process. Generally speaking, as long as you have a credit score of above 600, a steady income, and at least a 5% down payment, you should be able to secure a mortgage from most lenders. There are also options for those who don’t fit this standard or who have unusual needs.

Who are the available lenders in New Brunswick?

Although New Brunswick is one of the smaller provinces, there are still plenty of lenders for residents to choose from. These fall into several categories: traditional lenders such as banks and credit unions, mortgage companies and other financial providers, and niche lenders. This last category includes private lenders, bad credit lenders, mortgages for new construction, reverse mortgages, and so on. The vast majority of New Brunswickians get their mortgages from banks and credit unions.

If you’re seeking a commercial mortgage, the same range of options apply, and you may also be able to access government-sponsored mortgages as well, if you are a small or new business.

What kind of property can I purchase with a mortgage?

You can use a residential mortgage to purchase almost any kind of residential property, including a single-family home, a newly constructed home, a multi-unit property, a townhouse, a condo, a vacation property, land, or even a mobile home or houseboat. You can also use a mortgage to finance home renovations.

Commercial mortgages are for business-owned property, such as industrial buildings, multi-use properties, office buildings, medical buildings, retail plazas, warehouses, and so on.

How do I qualify for a commercial mortgage in New Brunswick?

Qualifying for a commercial mortgage is a little different from qualifying for a residential mortgage. Instead of analyzing your personal finances, the lender will analyze the finances of the company buying the property, and the primary factor of concern is the debt service coverage ratio. The lender will want to see copies of the business’s financial history, assets and debts, proof of profitability, projected revenues, and a business plan. Credit score is also important, as is the size of your down payment. All of this information together will dictate how much of a risk your business is considered to be, and how much you can borrow.

What’s the average interest rate on a mortgage in New Brunswick?

Interest rates in New Brunswick are not quite as low as in more populated provinces (as lenders cannot rely on the same volume of customers), but when combined with the province’s low property prices, purchasing property here is still very affordable. The exact interest rate you qualify for will depend on your personal circumstances – your income, credit score, down payment, and so on – but generally rates range from 2% to 5%, with the average sitting at 3%. Both variable rates and fixed rates are widely available.

How much do I need for a down payment on a New Brunswick mortgage?

The Government of Canada has stipulations on the size of down payment property buyers must have, which correspond to the value of the property being purchased. All home buyers in New Brunswick must follow these rules. Homes worth under $500,000 (which includes the vast majority of private properties in the province) need a down payment of at least 5%. Homes worth more than this need at least a 10% down payment, and even more if the property is worth over $1 million. The average property price in New Brunswick is $200,000, so the average required down payment is $10,000.

What fees and taxes do I need to pay when purchasing property in New Brunswick?

Buying a property always comes with a slew of fees and taxes, and as these can add up, it’s very important to know in advance how much to budget for them all. In general, the closing cost when buying a house in New Brunswick is about 1-2% of the sale price of the home, and this amount consists of: home inspection fees, mortgage lender fees, title insurance, legal fees, mortgage insurance, broker fees, and so on. This also includes Land Transfer Tax, which is low in New Brunswick, at just 1%. However, there is also a Harmonized Sales Tax of 15%. This is only payable on brand new properties, and rebates are available for properties worth less than $350,000.

What is mortgage pre-approval and do I need it?

Mortgage pre-approval is a useful but not required step that buyers can take when house hunting. Essentially, it means providing all of your financial documentation to a lender before you have found a home to purchase. The lender can then assess your situation and give you an estimate on how much you would be able to borrow, and at what rate. Some lenders offer “locked-in” rates with pre-approval, meaning that for a certain period of time you would be guaranteed this rate. This information can help inform your house hunting decisions and speed up the process when you find a house to bid on.

I’m a first-time buyer. What extra help can I get in New Brunswick?

The Canadian government has several programs to help first-time buyers get a foot on the property ladder, all of which apply to New Brunswick residents. The First-Time Home Buyer Incentive allows eligible buyers to finance a portion of their purchase through the government. The Home Buyer’s Plan allows you to withdraw up to $35,000 from an RRSP to assist with your purchase. There are also tax incentives: the Home Buyer’s Amount provides up to $5000 in tax credits, and buyers of new properties worth less than $350,000 are eligible for HST rebates.