Believe it or not, it’s common for residents of entirely different countries to come to Canada and apply for a mortgage in order to acquire a property. Whether they are individuals who want a vacation home, commercial property, or even a residential property while waiting to gain residency status. Not everyone has the financial means to purchase an entire property upfront. That’s what a non-resident mortgage is for. Let’s take a closer look at what a non-resident mortgage in Canada entails and, of course, how I can help you.
Can a Non-permanent Resident get a Mortgage?
Getting approved for a mortgage in a country of your residence could be much easier. Many lenders have restrictions for non-permanent residents so financing may be offered at a higher rate and may require a larger down payment along with other terms and conditions compared to mortgages offered to Canadian citizens or someone with permanent resident status. Even with these restrictions, it doesn’t mean that a mortgage is out of reach. Each situation is different and can be reviewed to find the best solution.
What is a Non-resident Mortgage in Canada?
The Canadian government considers a non-resident to be someone who spends at least 6 months of the year or more outside of Canada. Lenders classify non-residents differently. If you do not earn your income or file your taxes in Canada then you are a non-resident. You will be expected to provide more documentation for income verification, down payment verification, and creditworthiness. You may need to pay certain taxes for purchasing property in Canada. Required documents will include but are not limited to the following: proof of your income, a Canadian credit bureau. If this is not available then an international credit bureau and/or a letter from your current bank is required. You will also need to show proof of down payment depending on where you have residency currently and this can range from 20% to 35% down payment or more being required from your own resources. Some lenders may also ask to see a year’s worth of mortgage payments retained in a Canadian bank account before approving your mortgage.
How Non-resident Mortgages Works
It’s important that you know everything about the process before opting for a mortgage for a non-permanent resident to buy a property in Canada. Here are a few important points that you need to keep in mind regarding how it differs from mortgages in the country of your residence.
- Higher down payment — depending on what country you are a citizen of, the amount of your down payment will differ. Typically, the minimum will be set anywhere from 20% and up as opposed to lower down payment amounts that residents are able to access. The rate for an American opting for a non-resident mortgage in Canada is typically 20%. For residents of other countries, the down payment increases to a minimum of 35%.
- Proof of down payment funds — some lenders may expect you to show proof of available funds in a Canadian bank account. That figure may range anywhere from ninety days up to one year’s worth of mortgage payments. This is to ensure that you are capable of making payments for the foreseeable future.
- Letter of reference — you may also be required to submit a reference letter from a financial institution from your country of residence to confirm your current financial standing including outstanding debts and liabilities.
How a Specialized Mortgage Broker Can Help
It’s easy to get tangled up in the web of documents and paperwork required to be collected and submitted when opting for a non-resident mortgage in Canada. Not to mention if there are language barriers and conversions into local currency in the statements. All in all, those who opt for a non-resident mortgage can confirm it’s a lengthy and demanding process. Opting to work with a mortgage broker poses many benefits for you starting from leaning on their years of experience in the field to securing better rates for your approval and so on.
Please contact me, Jodi Habel, to make acquiring your non-resident mortgage in Canada smoother than you can imagine. After all, it may be your first time getting a mortgage as a non-resident, but I have acquired relationships with major banks, credit unions, monoline, and alternative lenders through my 15 years of experience working in the industry.