A borrower, newly arrived from the UK, has been employed in Toronto for 9 months with a stable position, earning $120,000 annually. They have a 25% down payment saved from their UK assets, which has been transferred to a Canadian bank account for 3 months. They have opened a Canadian bank account and obtained a Canadian credit card with a $5,000 limit, which they use regularly and pay in full. What potential challenge might this client face when applying for a high-ratio mortgage from a major Canadian bank?

Question: A borrower, newly arrived from the UK, has been employed in Toronto for 9 months with a stable position, earning $120,000 annually. They have a 25% down payment saved from their UK assets, which has been transferred to a Canadian bank account for 3 months. They have opened a Canadian bank account and obtained a Canadian credit card with a $5,000 limit, which they use regularly and pay in full. What potential challenge might this client face when applying for a high-ratio mortgage from a major Canadian bank?

Answer options:

• A. Their annual income is insufficient for a Toronto property.
• B. The 25% down payment exceeds the maximum allowed for high-ratio mortgages. ✅ C. Lack of sufficient Canadian credit history (minimum 2 trade lines for 2 years).
• D. The origin of their down payment being from outside of Canada.

Correct answer: C. Lack of sufficient Canadian credit history (minimum 2 trade lines for 2 years).

Explanation: While the client has a good down payment and stable income, many mainstream lenders, especially for high-ratio mortgages, require established Canadian credit history, often involving a minimum of two trade lines (e.g., credit cards, loans) for at least two years to assess creditworthiness. Nine months with one credit card may not be sufficient for all lenders under New-to-Canada programs, although some have more flexible criteria for high-ratio scenarios.