Mortgage - INTERNATIONAL SELLER

If you are planning to purchase property in Canada without any Canadian financing at all, then the government is all you really have to concern yourselves about. However, most foreign buyers need some kind of financing.

A-lenders Financing - Big-bank mortgages that assume that you are very low-risk, due to your higher, minimum down payment.

As a Canadian resident, financing is typically available at 75% of the purchase price for a primary residence over a 25-year term. For a non-resident, the ratio is generally 60% mortgage and 40% as a down payment. Qualifying for the mortgage financing is probably the same as in other countries - interviews via phone, fax, e-mail to gather personal information which includes assets/liabilities, employment and/or income information. Each borrower's application will be considered on a case-by-case basis. As your REALTOR®, I will be able to advise you on suitable mortgage brokers.

The mortgage approval may take approximately 24-48 hours after application and documentation has been submitted to the lender. The documentation generally required is income verification, tax returns, credit bureau or bank's report (letter from borrower's own bank stating that all accounts are in good standing to date), down payment confirmation via bank statements, copy of 2 pieces of ID and real estate appraisal. Foreign banks cannot register mortgages in Canada, so any mortgage would have to be raised via a Canadian mortgage broker.

The borrower will require the services of a Canadian lawyer or notary public to prepare the mortgage documents and registration at the Land Titles office. Documents can be couriered outside Canada for signing - this will need to be arranged with the lawyer and lender well in advance of the completion date.

B-lenders Financing - financing companies that are in the business of taking on a greater risk, and thus have higher interest rates, due to your lower down payment of 30% down or less.

For less than 20% down, under Canadian law, you must take on Mortgage Insurance.

To get Mortgage Insurance, you must satisfy the following parameters:

• You must have a minimum three months employment in Canada
• You must have a valid work permit, or have obtained Landed Immigrant status
• At least 5% of the down payment must be from the borrower's own source (not gifted)
• All debts held outside of the country must be included in the total debt servicing ratio
• Rental income from out-of-country cannot be used
• The documents you must produce are: - Valid work permit (or verification of Landed Immigrant status); - Income confirmation (letter of employment AND a recent pay-stub); - Down payment confirmation (Money lust be a Canadian bank account - at least 5% of down payment to be in a Canadian bank account for a minimum of three months) - Purchase & Sale Agreement

For 10% down payment:

• You must produce a Letter of Reference from a recognized financial institution OR six months of bank statement from your primary account
• You must have at least APPLIED to be a Permanent Canadian Resident

For 5% down payment:

• You must produce an International Credit Report demonstrating a strong credit profile, OR
• Two alternative sources of credit demonstrating timely payments (no arrears) for the past 12 months: - Rental payment history confirmed via letter from landlord and bank statements - One other alternative source (hydro/utilities, telephone, cable) to be confirmed via letter from service provider OR 12 months billing statements
• You must BE a Permanent Canadian Resident

You also may want to consider to combine financing from your originating country (possibly re-financing your current residence) with financing from a Canadian lender, if you'd like.

Some terms you might come across when dealing with Canadian Mortgages for International Buyers are:

• Payment Hypothecation - six months pre-paid, collected as an advance and put into trust, typically released after 12 months of satisfactory repayments.
• Assignment of Rents - for Investors, a document registered on the title of the property allowing the lender to collect rent directly from the renter, should the current mortgage go into default.

My experienced Team and I can help you make sense of all of that and more! Such as

FOR ALL INTERNATIONAL BUYERS, naturally, you must pay Property Taxes, and initially, a Land Transfer Tax. Property taxes run close to 0.8% of the purchase price, and you can find out the Land Transfer Tax using my calculator here. Also, before investing into Canadian real estate with the intent of becoming a Permanent Resident, it is advisable to thoroughly investigate what is available in the area, and should visit the city before buying. Naturally, if you are just investing, a trusted knowledgeable real estate agent can help you with all matters regarding this remotely.

For a complete resource for International Buyers, Sellers, Investors and Business Owners alike

Should you have any other questions regarding the information on this page, please do not hesitate to Contact Me here in Mississauga - Rathwood - Canada!