Starting the journey to buying your first home can be a daunting task. It can both overwhelming and stressful for anyone involved. However, with proper planning, you’ll be able to purchase the property of your choice. To help keep you on the right track, we’ve put together this guide that will help you get one step closer to buying on buying a property in Canada.
As a non-resident, your finances need to be in order before you think of venturing into the Canadian real estate markets. By so doing, you’ll be able to determine what is affordable for you to buy, and also have the required documents well organized to back a mortgage loan application.
While Canadian banks and lenders provide financing for non-resident to purchase properties in the country, applicants are usually required to agree on a considerably down payment of about 35 percent. What is more, you’ll qualify for a mortgage loan if you must provide proof that you have a stable job and income and excellent credit history. Bear in mind that some lenders may have a higher interest rate for non-residents. However, it is worthy of note, that Knightsbridge Foreign Exchange help foreigners save money on currency exchange with better interest rates.
Having an excellent credit score (650 and above) is essential if you’re considering for a mortgage. A credit score in Canada ranges between 300 and 900. Your potential lender uses this to determine the amount of risk they are getting in before granting your mortgage loan. Typically, the lower your credit score, the lower your chances of getting loan approval. Hence, it is important to check your score to see whether it is poor and then work on improving it before submitting a mortgage application.
Investigate Mortgage Options
Not all types of mortgages are created equal to fit everyone. That being the case, it is important that understand your mortgage options to secure a loan that suits your needs and expectations. If you have less than 20% down payment for a conventional mortgage, it is considered a high ratio mortgage and may be insured by organizations like CMHC (Canada Mortgage and Housing Corporation). Before getting a mortgage, you should get pre-approved for a particular amount of loan before you start house hunting.
As a non-resident who’s thinking of buying a property in Canada, you’ll be required to pay tax. Hence, it is important to discuss with your accountant so you can fully comprehend how the purchase or sale of a property in the country can affect your tax outlook.
For instance, Non-Canadian citizens who want to buy a property in Toronto are required to pay 15% tax on closing a transaction. Also, if a non-resident decides to sell his property, the buyer must withhold and remit 25% of the purchase price to the CRA (Canada Revenue Agency).
Non-residents are required to insure their home before a lender can grant a mortgage loan request. However, while some may find it hard to get insurance, getting it for may be expensive for some others. As such, obtaining insurance quotes is mandatory prior to buying a property in Canada.
Choosing a Realtor
Whether you are a Canadian or a non-resident, choosing a realtor has a good knowledge of Canada’s real estate market can help you buy properties. What is more, with the relevant expertise, a realtor can help you meet reliable property managers, lawyers, as well as mortgage lenders which can be useful in your situation.
You can ask friends, coworkers, and others for any recommendations of realtors. The internet is also a good place for finding someone who is perfect for you.