How To Qualify For A Mortgage If You Are A Non-Resident Buying In Canada
NEW COMERS AND NON-RESIDENTS BUYING PROPERTY IN CANADA
New-comers and non-resident home buyers are often faced with financing hurdles when they look into home purchase in Canada. Toronto Mortgage Agent Rosanna Younan has provided some lending information that could be helpful to new comers and non-residents planning to move to Canada.
NON-RESIDENT BUYING PROPERTY IN CANADA:
What is the definition of non-resident in Canada?
Non-residents are individuals who do not reside in Canada (they might have Canadian citizenship but do not live in Canada; or they may be citizens of a different country)
Does a non-resident buyer have to be in the country at time of purchase?
All mortgage documents executed by your lawyer at the time of closing must be completed with the borrower in Canada. Lender seldom permits signing of loan documents outside of country.
What is the minimum down payment for a conventional mortgage?
Typically, conventional mortgage for Canadian residents require 20% downpayment. However, for non-residents, lenders are looking at a minimum down payment of 35% or more for either fixed rate or vairable rate terms.
Are there restrictions to the type of property I can purchase as a non-resident?
The type of properties a non-resident can purchase can include: rental - up to 4 units; recreational property; purchase for family member to live in on rent free basis (ie: student attending university)
Are the rules different for buying an investment property?
Yes, the lender will require a minimum 35% downpayment. The downpayment for investment properties must be from savings. If the property will be your principal residence and you do not own a home in another country, downpayment can be from existing savings or gifted. Interntational ETFs of over CAD$10,000 must be reported.
What are other mortgage qualification requirements for non-residents?
full property appraisal [mandatory by lender]
maximum 25 year amortization
Income verification: standard: letter of employment & pay slip
Credit history: if US resident: us Equifax; if INTERNATIONAL resident: the lender may request (1) international credit bureau or (2) 6 months credit card statements to demonstrate satisfactory credit or (3) 6 months banks stmts to demonstrate satisfactory loan or mortgage repayment
Debt Servicing: standard debt servicing ratios apply; must also take into account any debt in their country & housing cost from their principal residence.
if you plan to put more than 50% downpayment: income verification can be waived under centrain scenarios!
Are there financing options for TEMPORARY RESIDENTS OF CANADA?
Yes. There are financing options for temporary residents (ie: on a work permit, In this case, they need to have relocated to Canada within the last 24 months.
BUYERS NEW TO CANADA:
Other rules apply to facilitate mortgages for NEW TO CANADA: for these borrowers, if they don't have a credit history established in Canada, the lenders will look at other ways to determine their credit worthiness (ie: rent payments, car insurance payments etc).
If you need further clarifications or need expert advice to consider financing options, you can contact our real estate team for a consultation or our third party licensed mortgage partner Rosanna Younan from Verico Premiere Mortgage Centre Inc. C: 416 729 9210