Yes, it is possible for Non-resident Canadian citizens, Non-resident foreigners and Non-residents who are planning to move to Canada, to get a mortgage approved from Canadian financial institutions to purchase a property.
Who are Non-residents in Canada?
You are considered as a non-resident in Canada if you routinely live outside of Canada or if you live outside Canada throughout a tax year or if you stay inside Canada for less than 183 days in a particular tax year.
What is a Mortgage?
Mortgage is a loan that is taken to purchase home or any other investment property. The property itself is used as a collateral for the loan. The interest rate may be fixed or variable and the loan term goes until 30 years depending on the age and creditworthiness of the borrower.
Can non-residents get a mortgage in Canada?
The Canadian Real Estate Association reported that, the average cost of purchasing a home in Canada is nearly $605,000 in the year 2022. The price range has increased by 17% from the previous year. Hence, mortgage has become a main source of funding the property purchase.
It is possible for non-residents to obtain mortgage from Canadian financial institutions, but the stringent rules that are followed:
- You might be asked to come down to Canada for the application approval process
- Strict identification process
- Higher fixed interest rate
- Higher down payment
- Additional costs
What are the down payment rules for non-resident mortgages in Canada?
- If you are a resident of the United States, then you must fund at least 20% of the home value as the down payment.
- If you are living anywhere outside of Canada and the United States, then you must have at least 35% down payment.
- It is to be noted that the down payment amount must be available in one of your Canadian bank accounts before applying for the mortgage. It must be your money and not be a gift.
What are the additional costs incurred by non-residents for taking mortgage in Canada?
- Speculation tax for non-residents
- Provincial and municipal transfer tax on real estate
- Sales tax levied on mortgage insurances
- New construction taxes
What are the Identification documents required to obtain a non-resident mortgage in Canada?
- Proof of income such as employment agreement, pay slips etc.
- Bank statement for 3 months
- A letter of reference from your home banker
- Six months financial statements
- International credit report
- A Canadian bank account
Mortgage for Non-residents of Canada
Thus, it is possible for Non-residents of Canada to get a mortgage approved and purchase their desired investment property. Before applying for the loan,iIt is important for you to ascertain the loan interest rate, how different it is from the standard interest rate, if you are required to be present in Canada, bank processing fees, down payment rate and how long it needs to be in your Canadian bank account.