Welcome to part 2 of our FAQ for Non-Resident Canadian Property Buyers series. In part 2, we’ll address your questions surrounding non-resident financing to assist in your buying and financing decisions.
As a non-resident of Canada, can I get a mortgage to buy a home?
The answer to this question is Yes! Although rules and restriction can vary depending on the type of lender you go with, Tier 1 lenders such as Canadian banks will require you to have a 35 percent cash down payment. Therefore, you can qualify for a mortgage valued at 65 percent of the property’s value.
What qualifying factors will I need to meet for a non-resident mortgage?
As a non-resident, to qualify for a mortgage on a Canadian property you will require:
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A down payment of 35%, which cannot be from gifted funds
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A bank reference letter
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An employment letter that verifies your income (CAD or USD)
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Banking statements for 3 months
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A credit check from a Canadian credit bureau (Equifax or TransUnion)
As a non-resident applying for a mortgage, what will my interest rate be?
Provided you meet the mortgage eligibility requirements, as a non-resident you’ll be able to get the same interest and other Canadian residents. However, you will only be able to get a fixed-rate interest rate if you reside in a country that doesn’t have a tax treaty with Canada. Even if you don’t meet the eligibility criteria, you can still apply for financing with other lenders, but your interest rate might be higher.
Will lenders consider out-of-Canada rental income as a portion of my income?
No, unless your rental properties are in Canada they will not be considered in qualifying you for a Canadian mortgage.
Do I have to open or have a Canadian bank account for my down payment?
Yes. If you are a non-resident you must open a Canadian bank account and deposit your down payment funds at least 90 days prior to your closing date, and at least 30 days prior to your closing date.
What are trust deposit, when is it required and what are my payment method options?
Once you’ve found a property you want to purchase, and put in your offer, you’ll be required to make a trust deposit. This could start at about 5 percent if you’re making your purchase in the GTA (Greater Toronto Area).
The deposit would be required within 24 hours of your offer being accepted. The reason it’s called a trust deposit is because the listing brokerage usually hold your deposit in their trust account, and it’s later used towards your down payment. So, before you start your property search, it’s a wise idea to open up a Canadian bank account for your deposit funds.
You have two payment method options for paying your deposit when the time comes:
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Certified cheque
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Wire transfer
As a non-resident, what kind of closing costs can I expect?
In part one of this series, we discussed the 15 percent Non-Resident Speculation Tax which you’ll be required to pay as a non-resident. On top of this, there are also other closing costs such as:
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Legal fees
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Property appraisal fees (if not covered by your lender)
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Home inspection fees
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Balance of your purchase price
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Title insurance
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Mortgage broker commission (if not paid by your lender)
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Property survey
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Ontario land transfer tax (if you’re purchasing in Toronto you’ll also have to pay the Toronto land transfer tax too)
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If you’re buying a new condo or house – HST, Tarion Warranty fees\
Are there any government programs for non-residents?
Unfortunately not. Since you are a non-resident of Canada you will not qualify for the first time buyer programs or land transfer tax rebates offered by the Government of Canada.
More questions about mortgage financing for non-residents? Call us now, we’re always available to speak to you and support you on the path to Canadian home or property ownership.
Stay tuned for Part 3 on Non-Resident Home Buying, Insurance and Legalities.
When we say Yes! We stand behind our promise.