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You’ve finally saved up enough to buy your first home. Or at least, you think you have. After researching the mortgage market and speaking with a few housing advisors, you feel confident that your income and assets are sufficient to get a mortgage loan. You know there will be additional requirements, but you’re feeling optimistic about getting approved. In fact, you even have friends or relatives who recently bought homes and told you it wasn’t as difficult as they thought it would be. Perhaps they are right… if they happen to be Canadian citizens or permanent residents. Unless you also happen to be a citizen or permanent resident of Canada, buying a home here is going to prove much more challenging than what you imagined. In fact, unless you can document that you’re entitled to reside in Canada indefinitely with no risk of deportation for any reason (which would involve jump through several hoops), the process could take longer than what you expect… and cost far more than what you anticipate spending on housing.
Why Are Mortgage Rules for Canadians Only?
There are several reasons that lenders and the government require Canadian citizenship or permanent resident status before granting a mortgage, including: a) ensuring the borrower has a reliable source of income, b) showing that the borrower has enough equity to fall back on in an emergency and c) ensuring that the borrower, and any co-signers, are reputable and can be contacted easily, if need be.
Foreigners are not allowed to buy homes in Canada without a mortgage.
While it is possible for some non-residents to buy homes in Canada without a mortgage, it’s not easy and definitely not for the faint-hearted. The process is highly regulated and intended for those who have a sizeable amount of money in their bank accounts, assets that could be sold quickly, or significant assets (like stocks, bonds, etc.) that could be converted to cash quickly.
How Long Does It Take to Get a Mortgage in Canada as a Non-Canadian?
The good news is that, as a non-resident, you don’t have to jump through the same hoops as Canadian citizens or permanent residents. You simply need to prove you have sufficient income to cover your debt and, ideally, have a down payment that is large enough to meet the lending guidelines. The bad news is that it could take several months and cost more than you expect. The process of applying for a mortgage as a non-resident can be slow, complicated, and costly because you do not have the same rights as a Canadian citizen.
Costs of Getting a Mortgage for Foreigners in Canada
Due to the strict requirements for qualifying for a mortgage as a non-resident, the costs could be much higher than what you’re used to paying back home. You may be asked to put down a larger down payment, pay more in interest, and be required to pay GST and/or HST on the mortgage. You may also be required to submit additional paperwork and pay higher fees than what Canadian citizens typically pay. If you’re purchasing a condo or townhouse, you’ll also be required to pay a higher insurance premium than a Canadian resident would pay.
What You Need to Document Before Applying for a Mortgage as a Non-Canadian Resident?
If you’re applying for a mortgage as a non-resident, you’ll need to provide documentation that demonstrates you are capable of repaying the loan and that you have sufficient assets to cover the down payment and closing costs. This typically consists of: – A letter from your employer or a written confirmation of your monthly income – A letter from the bank or financial institution holding your assets – An estimate of what your monthly expenses are – A letter from your bank verifying your cash flow – Letters from individuals who have agreed to act as guarantors (mortgage co-signers)
Can You Buy A Home In Canada Without Being A Canadian Resident?
Yes, you can, but you won’t be able to get a mortgage on the home. There are a few other ways you can buy real estate in Canada if you’re not a resident: a) Buy a home in the name of a Canadian resident and have them transfer the title to you after the sale is complete. This can be a lengthy process and will require the Canadian resident to have sufficient income to qualify for their own mortgage. b) Buy a home owned by a non-resident who is willing to sign over the title to you. This method of buying real estate in Canada is risky, as the owner could change their mind and ask for the title back at any time. c) Make an offer on an unoccupied home that is for sale by the owner. This is the most common method for foreigners to buy homes in Canada without being residents.
The Bottom Line
As a non-resident, you’ll need to be prepared for a longer, more complicated process to get a mortgage in Canada. Your income will be verified and you’ll have to put down a larger down payment than what a Canadian citizen would have to put down. You may also be required to pay GST and/or HST on the mortgage and mortgage insurance, which a Canadian resident would not have to pay. If you are serious about buying a home in Canada and do not happen to be Canadian or a permanent resident, you will need to start preparing your documentation and information as soon as possible so that you get the process completed in a timely manner.