FAQ for Non-Resident Buyers For Buying Canadian Properties

RESIDENCY QUESTIONS FOR NON-RESIDENTS

Who can buy real estate in Canada?
Canada welcomes home buyers from all countries, and there are no restrictions on the amount or kind of real estate you can buy. Some banks will restrict the number of properties they will finance to 5 properties per person. Additionally, as of April 21, 2017, there is a 15% Non-Resident Speculation Tax that must be paid by non Citizens and non-permanent residents (including corporations and trusts) – read the details here.

Will buying a property in Canada improve my chances at immigration?
Immigrating to Canada is a complex process and, unfortunately, owning property here is NOT one of the factors taken into consideration. Of course, it won’t hurt your chances and will be considered part of your overall net worth, but simply owning a home in Canada does not affect the selection process. If you’re wondering if you’d be eligible to immigrate to Canada, visit the Government of Canada Citizenship and Immigration website.

I’m a Canadian citizen living in a different country. Would I be considered a non-resident for the purposes of buying real estate if I’m an expat?
Citizens of Canada who don’t reside in Canada for more than half the year are considered non-residents by banks (and thus subject to all the same rules) but not by the government for the purposes of the non-resident speculation tax. Canadian citizens are not subject to the 15% non-resident speculation tax.

I’m a non-resident and want to purchase a property in Canada with a resident. How will that be treated?
If you buy a property with a non-resident, you will be treated by a Canadian bank as a non-resident and thus subject to the same requirements, including a higher downpayment. If you are purchasing with a spouse who is a permanent Canadian resident, you are not generally subject to the Non-Resident Speculation Tax.

FINANCING Q&A FOR NON-RESIDENTS

Can a non-resident get a mortgage to purchase a house in Canada?
Yes! Usually Canadian banks and lenders require non-residents have a minimum 35% down payment (in other words, 35% of the cost of the home paid for in cash, with a maximum of 65% of the home’s value provided as a mortgage). Different banks have different rules of course, and some will be more strict than others.

How do I qualify for a mortgage as a non-resident?
To qualify for a mortgage for a property in Canada, non-residents will generally require:

  • A 35% downpayment (not from gifted funds)
  • A reference letter from their bank
  • An employment letter verifying income in Canadian or US dollars
  • Three months bank statements
  • Canadian credit check

What kind of interest rate will I get on a mortgage as a non-resident?
Non-residents are eligible for the same interest rates as Canadians, provided they meet the mortgage eligibility criteria. If you live in a country that does not have a tax treaty with Canada, you will only be eligible for a fixed-rate interest rate.

If you don’t meet the eligibility requirements, you may still be able to get financing from other lenders who charge higher interest rates.

Will Canadian banks consider rental income as part of my income?
Most lenders will only consider rental income from Canadian properties, and thus rental income from properties outside of Canada will not be considered part of your income to qualify for a Canadian mortgage.

How long does the down payment have to be in a Canadian bank?
Normally, most Canadian banks will require your down payment to be in a Canadian bank for 30 days before the closing of the purchase. Most banks will want to be able to trace the source of your down payment going back 90 days.

What’s a deposit, when do I need it and how do I pay it?
After you’ve made an offer on a property in Canada, you’ll need to provide a deposit – usually around 5% of the purchase price in Toronto – within 24 hours. That deposit is held in trust by the listing brokerage and forms part of the down payment when it comes time to take possession of the property. It’s a good idea to open a Canadian bank account and have the deposit in the bank account when you start the search for a property – when you are ready to pay the deposit, they can either issue a certified cheque for you, or they can arrange to send the deposit funds via wire transfer.

Can you recommend a mortgage broker who is used to helping non-residents buy property in Canada?
We have put together a full team to help our non-resident clients. If you work with the BREL team to buy your home, you’ll have access to mortgage lenders, lawyers, home inspectors and insurance agents who understand the intricacies of non-resident home purchases or investments.

What kinds of closing costs should I expect to pay?
As a non-resident, you will have to pay the 15% Non-Resident Speculation Tax and be subject to the other regular closing costs, including land transfer taxes and legal fees.

Will I qualify for any government programs?
As a non-resident, you will not qualify for the first-time buyer programs or land tax rebates offered by the Canadian government.

I don’t need a mortgage. How do I pay for the property?
You can buy a property without getting a mortgage if you have 100% of the funds in cash. That money would need to be transferred to your lawyer before closing on the property.

Leave a Reply