Obtaining a non-resident mortgage in Canada is not easy. But, if you have a burning desire to own a log cabin in the great white north, you’ll be happy to hear that it’s entirely possible. Of course, you’ll have to jump through hoops, choose the right bank, and understand potentially risky politics… but we’ll get to all that in a bit.
Non-Resident Mortgage in Canada
Non-resident mortgages in Canada are obtainable. However, non-resident applicants have to meet extra requirements. These requirements include higher interest rates, higher down payments, and more intense screening processes. Additionally, not all Canadian banks offer non-resident mortgages. But, some banks do. Bottomline, with the right direction, most applicants should be able to get a non-resident mortgage in Canada.
In this article, we’ll share the information you need to know when applying for a non-resident mortgage in Canada. Including how to navigate the application process, the challenges you’ll face, and the potential risks.
Of course, we’ll also discuss who can access non-resident mortgages in Canada, the potential benefits, and share helpful tips on how to get started.
But, before diving in, if this is your first time visiting GlobalBanks, don’t forget to download your free Non-Resident Banking Starter Guide. It’s designed to help non-residents open accounts in top banking hubs around
Who Can Apply for a Non-Resident Mortgage in Canada?
Typically, the people that apply for a non-resident mortgage in Canada are individuals who are expecting to move to Canada one day.
That said, they aren’t the only ones…
Many Canadian and foreign non-residents have a desire to own property in Canada, whether they’re after a log cabin in the Rockies, their own island, or anything in between.
When it comes to Canadian real estate, there are as many options as there are reasons for wanting to own property there.
Interestingly, non-resident mortgages in Canada are actually accessible to most people…
Who Can Get a Non-Resident Mortgage in Canada:
- Non-Resident Canadians
- Non-Resident Foreigners
- Non-Residents Planning on Moving to Canada
As you can see, Canada has no restrictions on who can apply for a non-resident mortgage. But, knowing where to start and how to get approved can be difficult.
So, the decision to get a non-resident mortgage in Canada may be simple, but the process of getting one, not so much.
Of course, there’s always a chance you may get denied. Typically, this is because the applicant provided incomplete or incorrect documentation, didn’t understand the specific requirements, or simply didn’t have sufficient funds for the down payment.
We’ll cover these issues in more detail below. But, for now, if you fall into one of the above categories and are wondering what benefits you can tap into, look no further.
Benefits of Getting a Non-Resident Mortgage in Canada
In this section, we’ll share some of the ways non-residents can take advantage of mortgages in Canada. Of course, we’ll also take a look at the challenges and risks below. But first, the pros.
No Restrictions on Applicants
Unlike many countries, banks in Canada actually offer mortgages to all non-residents. In other words, any non-resident is eligible to apply for a mortgage in Canada.
Additionally, many banks in Canada will allow you to apply for mortgages 100% remotely. Of course, this can vary depending on the bank or mortgage broker you deal with. But, in many cases, this is possible.
Ownership of Canadian Property
Canada has an extremely diverse landscape. From vast prairies, mountain ranges, and winding coastlines, it literally has something for everyone. So, if you’re looking to buy a second home or a vacation property, it might be the ideal place to consider.
Of course, owning a property in Canada does not automatically make you a resident of Canada. Nor does it give you the right to live in Canada. But, through a non-resident mortgage in Canada, you can tap into affordable financing to purchase your dream property.
Attractive Financing Terms
Banks in Canada, along with the US, UK, and parts of Europe, are currently offering very attractive financing terms. Historically low-interest rates and relatively low down payments, make financing property in such places an attractive proposition.
So, if you’re from outside of these “low financing” countries, accessing a mortgage as a non-resident could be an interesting way to benefit from cheap financing in stable markets.
Investment Opportunity
Whether you’re looking to invest in properties such as multi-unit buildings, individual rental properties, or development sites, getting a non-resident mortgage in Canada can help you do just that.
Of course, all applicants need to overcome challenges, risks and go through the process of obtaining a mortgage before taking advantage of these benefits. But, if you can do so, you’ll be on your way to getting the financing you want in no time.
Note: Just because Canada welcomes non-residents from most countries to apply for a non-resident mortgage, doesn’t mean you’ll get approved.
So, it’s important to understand the challenges and risks that you could face when getting a non-resident mortgage in Canada, let’s dive in.
Challenges of Getting a Non-Resident Mortgage in Canada
Of course, each non-resident’s situation is different from another. Meaning, that while one individual may face one challenge, another person may not. That said, it’s important to understand all the possible challenges you could face to make sure you’re prepared.
So, to ensure you have all the facts and are well prepared, let’s take a look at the most common challenges you could face when getting a non-resident mortgage in Canada.
Challenges of Getting a Non-Resident Mortgage in Canada
- Personal visit is sometimes required
- Intense identification process (especially when done remotely)
- Finding a mortgage broker or bank that accepts non-residents
- Higher down payment is required
- Securing a reasonable fixed interest rate
- Difficult & expensive to obtain a non-resident homeowner’s insurance
- Canadian bank account is required
Of course, these challenges may vary depending on your unique client profile and mortgage needs. But, some banks and mortgage brokers can make it more difficult for a non-resident to get a Canadian mortgage than others.
Beyond these challenges, there are also potential risks that you need to be aware of…
Risks of Getting a Non-Resident Mortgage in Canada
In addition to the normal risks associated with locking in a mortgage as a non-resident in Canada, there are several new risks that have presented themselves due to Covid and pending political decisions.
1. Restrictions on Travel (COVID-19)
Due to the global pandemic, there have been travel restrictions put in place throughout Canada. And, some of these restrictions are currently still in place. So, there’s a risk that non-residents will not be able to travel to Canada to either finalize their mortgage or visit their property after purchase.
2. Limitations on Viewing Properties
Similar to the above comment. The pandemic has not only put limitations on travels to Canada but also meeting with banks and mortgage brokers in person. Not to mention, viewing properties physically in person has its difficulties. So, the risk of not being able to actually view properties and make a final decision should be taken into consideration.
3. Non-Resident Speculation Tax
As a non-resident, there’s a risk that you may be responsible to pay the Non-Resident Speculation Tax (NRST) when you purchase a property — depending on where you purchase. If applicable, the NRST is 15% of the purchase price of your property in Canada.
As always, we highly recommend you connect with a qualified tax advisor to ensure you’re aware of all the possible taxes you could owe as a non-resident before you decide to purchase a property.
4. New Canadian Government Regulations
Perhaps the biggest risk to non-resident mortgages in Canada is the government of Canada itself.
At present, the government is considering an annual tax on the value of non-resident real estate that is vacant for a period of more than 6 months. Similar programs have already been rolled out in popular non-resident real estate markets such as Vancouver.
Additionally, they are looking to implement a Home Buyer’s Bill of Rights that (among other items) will block foreign purchasing of homes for two years.
If these changes are enforced, not only will purchasing a property as a non-resident be difficult but getting a non-resident mortgage in Canada will become almost impossible.
How To Get a Non-Resident Mortgage in Canada
In case it isn’t clear, you’re going to have to jump through some hoops to get a non-resident mortgage in Canada. But, that doesn’t mean it’s impossible… at least not yet.
In fact, if you follow the step-by-step process below, meet the specific requirements, and submit the required documents you should be able to get a non-resident mortgage in Canada without too much hassle.
Of course, the requirements and required documents may vary depending on a few things: your situation, the bank or mortgage broker, and exactly what your requirements are.
So, with that said, let’s look at how to qualify to get a non-resident mortgage in Canada.
How to Qualify for a Non-Resident Mortgage in Canada:
- Credit check (where possible)
- Employment letter verifying income
- Bank statements (3 to 4 months)
- Bank reference letter (from home country)
- 35% – 50% down payment
- Have a Canadian bank account
Note: expect to submit and provide proof of all the items listed above.
Now, before you contact banks, you should get familiar with the important questions you’ll need to ask when applying for a non-resident mortgage in Canada.
Important Questions to Ask When Applying for a Non-Resident Mortgage in Canada:
- What is your down payment amount?
- How long does your down payment have to be in an account?
- Does your down payment have to be in a Canadian bank account?
- What is the interest rate for the mortgage?
- Are interest rates different for non-residents?
- Do you need to be physically present in order to get a non-resident mortgage?
- If you do acquire a mortgage and purchase a property, what are the other costs associated with the process?
- Do you need to be physically present in order to purchase a property?
These questions are important to ask before applying for a non-resident mortgage as they can help guide you to the right bank or mortgage broker.
Of course, if you want to avoid the headache of calling and asking these questions and you want to know which bank and banker will give you a non-resident mortgage, then we’re happy to help.
In fact, GlobalBanks helps individuals and businesses open bank accounts around the world, including in Canada. And, when our premium members, GlobalBanks Insiders, have specific account opening objectives, such as unlocking mortgages, we help them connect with banks and bankers that can assist them with their needs.
So, if you’re looking to get a non-resident mortgage in Canada today, here’s how to start…
Start The Process Today
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