Canada has a thriving expat community, and it’s no surprise given that it is a country that has so much to offer. Whether you’re looking to explore the great outdoors, moving to be closer to family, or taking on a fantastic new business opportunity – Canada is a great place to live.
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Can foreigners buy property in Canada?
Canada has a relatively open-door policy for foreigners looking to buy property, and non-residents have the same ownership rights as residents. There are also some states that have specific guidelines that need to be followed. Here are some things to be mindful of:
- If you are planning to stay in Canada for six months or less, you are considered a non-resident, however if you want to stay for longer than six months a year, you need to apply to be an immigrant. Click here for official information for UK nationals moving to and living in Canada.
- It might be helpful to speak with a lawyer to support you with paperwork required by Canadian banks and realtors, especially if you aren’t currently living in Canada
- In April 2017, the Government of Ontario introduced the Non-Resident Speculation Tax (NRST), a 15% tax on the purchase of residential property in the Greater Golden Horseshoe region of the Toronto area by people who aren’t citizens or permanent residents of Canada.
Where are the best places to buy in Canada?
How to choose where to live in Canada? With an endless frontier, beautiful mountainscapes, rugged coastline and modern, thriving cityscapes, Canada has everything. Where you decide to live depends on a number of things:
- Quality of Life: Canada ranked as no.1 in the Quality of Life Index 2020 in a survey of more than 20,000 people across 73 countries which looked at nine different aspects including economic stability, job market, family friendliness and more.
- Best places to live: Well, the conclusion of moneysense.ca is that thanks to its strong economy, low crime rates and great weather, that crown goes to Oakville, Ontario. Not only is Ontario the best place to live overall, it’s voted the best place for new Canadian immigrants, the third best place to retire and the fifth best place to raise a family.
- Cost of Living: According to the 2020 Cost of Living Index, Winnipeg, Victoria and Vancouver were in the top 30 most expensive cities in the world.
- Property affordability: Canada was ranked as 85th in the 2020 Affordability Index by Numbeo with property prices being high in comparison to other countries around the world however it really does depend on which state you decide to move to
- Climate: Canada’s climate varies greatly, so make sure you look into this when researching properties – or you could be in for shocking amounts of snow!
The buying process for non-residents
Find a realtor
Most house sales are conducted through a realtor. Two in fact – one for the seller and one for the buyer. The good news is that if the seller is using a realtor, he or she will pay both their realtor’s fees and yours. If the seller isn’t using a realtor, be sure to agree who is going to pay your realtor’s fees – if you don’t, those charges could end up in an invoice to you.
Get a pre-qualified mortgage
If you need a mortgage, then you’ll be told the answer to this question quickly and in no uncertain terms. As a rule of thumb, according to Canada Mortgage and Housing Corporation (CMHC), your monthly housing costs (mortgage payments and utilities etc) should not exceed 30% of your gross monthly income and your entire monthly debt load (your mortgage payments plus those of all your other debts) should be no more than 40% of your gross monthly income.
Finding a property
It’s great to know what type of property you are looking for before speaking to a realtor. Detached? Townhouse? Apartment? Other? And, find out how much you can afford by researching mortgages before you speak to your realtor, and make sure you speak to a Canadian Mortgage Broker as you won’t be able to use a foreign bank to get your mortgage.
Once you know exactly what you can afford – and not before – start looking online to see what grabs your fancy. The realtor.ca site, for example, lists hundreds of thousands of homes for sale across the whole of Canada. And once you’ve seen a few that you like, ask your realtor to preview them for you to help you choose the right one for you.
Get your real estate lawyer involved
In Canada, it’s common practice only to involve a lawyer in the later stages of buying a property. Their principal jobs are to review the paperwork, conduct a title search, register the deeds, look after the transfer of funds, and generally help you avoid falling foul of any traps. But the earlier you involve them, the better. Not only could they save you time and money, they could reduce the risks.
If friends and family are unable to recommend someone, find a lawyer through the law society of your province or through your realtor.
If you’re a non-resident, make sure you find a lawyer familiar with the intricacies of overseas property ownership. They can help you sign the contract and transfer monies for the purchase.
Getting a mortgage in Canada – all the information you need
In Canada, the minimum down-payment on a property is 5%. If you’re putting down less than 20%, you’ll need mortgage default insurance, either from CMHC (Canadian Mortgage and Housing Corporation) or a private insurer. To obtain this, you’ll need to be able to satisfy the insurer that you’re going to be able to service the mortgage repayments.
If you’re a non-resident, you’ll only be able to borrow 65% of the purchase price and so will need to stump up a down-payment of at least 35%. As foreign banks aren’t allowed to register mortgages in Canada, you’ll have to use a local one. Expect plenty of interviews and demands for endless documentation and information.
Where to find a mortgage
You can go directly to a Canadian bank or to a mortgage broker. The advantage of the latter is that he or she will know the ins and outs of the mortgage marketplace and find one that suits your needs. They also get access to preferential rates. Brokers are especially useful if you fall outside the easy-to-assess ‘payroll monkey’ category – for example, if you’re self-employed, a contractor, own your own business etc.
If you’re non-resident, make sure you choose a broker who is familiar with mortgages for foreign buyers.
The true cost of buying a home in Canada
When determining a suitable price range, be sure to budget for everything. Your realtor can help you do this. Some of the costs may not be obvious:
- The purchase price
- Property or land transfer tax – this varies from province to province
- Possible bank appraisal fees
- Home inspection costs (the equivalent of a survey in the UK). Although a home inspection is not required by law, you should never risk purchasing a property without one. Home inspectors are regulated in some provinces but not in others, so choose with care and never take one suggested by the seller. See the Canadian Association of Home & Property Inspectors website at cahpi.ca
- Home insurance – your mortgage lender will make it a condition of the loan
- Legal fees
- A new-build home may attract a Goods and Service Tax (GST) or Harmonized Sales Tax (HST) – check with the seller if it’s included in the price quoted or not
- If you’re buying in Ontario’s Greater Golden Horseshoe Region and you’re not a resident or citizen, you’ll have to bay a Non-Resident Speculation Tax (NRST) of 15%
- A variety of other ‘closing fees’ which could include a condominium estoppel certificate or a township levy. Again, your realtor will advise you
- The cost associated with sending your funds abroad
Why should you use a realtor?
It’s recommended to use a realtor when buying a home in Canada because the seller usually pays your realtor’s fees, and your realtor will:
- Take some of the legwork out of finding your ideal home
- Bring a valuable knowledge of both property and the area to the table
- Negotiate a better price on your behalf
- Help with legal contracts
A real estate agent is legally obliged to look out for your interests and is bound by a code of ethics.
Choosing your realtor
Find a realtor who:
- Is registered with the Real Estate Council or equivalent for your province
- Knows the neighbourhood inside out
- Specialises in representing buyers
- Has solid experience
- Is a full-time realtor (many do it as a second job)
- Has been recommended to you by someone who’s actually used them, or…
- … has good and credible reviews online
If you’re a non-resident you should also make sure you find a realtor who understands the ins and outs of foreign property ownership.
The process of making an offer
Once you and your realtor have agreed that this is the house for you and have come to a decision about a sensible price, he or she will put together an offer-to-purchase and send it to the seller.
The offer typically specifies:
- The purchase price you’re prepared to pay
- Any items you want included such as appliances or furniture
- The deposit amount
- The financial details of any mortgage you’ll be taking on
- Required closing date for the sale (usually 60-90 days)
- The period for which the offer is valid
- Any other conditions – for example, you might want to insist that a leak is fixed, a door replaced or a fence mended
You may be expected to include a deposit of no more than 10% of the property price but this is refundable in the event of the sale falling through.
Bear in mind that you could be in competition with other bidders, so don’t try to squeeze the seller too hard.
Transferring money for purchasing abroad
Good luck buying your new property in Canada. If you need support transferring funds abroad, contact us here.
More information on Moving to Canada
- How to Move to Canada
- How to Retire to Canada
- How to Find a job and work in Canada
- How to Start a business in Canada
- How to Buy a car in Canada
- How to Sell a home in Canada
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