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.
This article is part of our series on non-resident banking in Canada. If you would like to access our other free resources, you can start with our guide to the top-tier institutions and largest banks in Canada by clicking here.
KEY TAKEAWAYS
- Purchasing a home in Canada as a non-resident has its challenges, but it’s not impossible
- Non-residents need to meet specific requirements to qualify for a mortgage
- Unlike many countries, there are no restrictions on who can apply for a mortgage loan in Canada
- Some banks in Canada will allow you to apply for a mortgage 100% remotely
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 the world.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Non-resident Mortgage in Canada
- Who Can Apply for Canadian Mortgages?
- What Are the Benefits of Getting a Non-Resident Mortgage in Canada?
- What Are the Challenges of Getting a Non-Resident Mortgage in Canada?
- What Are the Risks of Getting a Mortgage in Canada as a Non-Resident?
- How to Get a Non-Resident Canadian Mortgage?
- Do You Want Help Opening Bank Accounts?
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. The bottom line, in the right direction most non-resident applicants should be able to get a Canadian mortgage.
In this article, we’ll share the information you need to know when applying for a mortgage in Canada as a non-resident. 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 Canadian mortgages as a non-resident, the potential benefits, and share helpful tips on how to get started.
Who Can Apply for Canadian Mortgages?
Typically, the people who apply for non-resident mortgages 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 the Canadian real estate market, there are as many options as there are reasons for wanting to own property there.
Interestingly, foreign non-resident mortgages in Canada are accessible to most people…
- 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 mortgage as a foreign non-resident. But, knowing where to start and how to get approved can be difficult.
So, the decision to get a mortgage in Canada may be simple, but the process of getting one is not so much.
Of course, there’s always a chance you may get denied for a form of financing, whether it’s a line of credit, credit card, or a mortgage. 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.
line of credit vs credit card,
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.
What Are the Benefits of Getting a Non-Resident Mortgage Loan in Canada?
In this section, we’ll share some of the ways non-residents can take advantage of a mortgage loan 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 loan 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 home 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 loan in Canada, you can tap into affordable financing to purchase your dream home (or property).
Attractive Financing Terms
Banks in Canada, along with the US, UK, and parts of Europe, are currently offering very attractive financing rates and 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
Real estate investors looking to invest in properties such as multi-unit buildings, individual rental properties, or development sites in Canada can do so buying obtaining a non-resident mortgage.
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 and rates 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.
What Are the 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 mortgage in Canada as a non-resident.
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 bank lenders 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…
What Are the Risks of Getting a Mortgage in Canada as a Non-Resident?
In addition to the normal risks associated with locking in a mortgage as a non-resident in Canada, several new risks have presented themselves due to pending political decisions.
Non-Resident Speculation Tax
As a non-resident, there’s a risk that you may be responsible for paying 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 home.
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 a non-resident real estate property 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 mortgage in Canada as a non-resident will become almost impossible.
How To Get a Non-Resident Canadian Mortgage?
In case it isn’t clear, you’re going to have to jump through some hoops as a foreign non-resident buying property 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 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 mortgage in Canada as a non-resident.
How to Qualify For Canadian Mortgages
- 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 bank account in Canada
Note: expect to submit and provide proof of all the items listed above.
Now, before you contact lenders, you should get familiar with the important questions you’ll need to ask when applying for mortgages in Canada as a non-resident.
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 bank account in Canada?
- What is the interest rate for the mortgage?
- Are rates different for non-residents?
- Do you need to be physically present in order to get a mortgage?
- If you do acquire a mortgage and purchase a home, what are the other costs associated with the process?
- Do you need to be physically present in order to purchase a home?
These questions are important to ask before applying for a mortgage as they can help guide you to the right bank lenders or mortgage brokers.
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 mortgage as a non-resident, 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.
Do You Want Help Opening Bank Accounts?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
GlobalBanks Insider is a dedicated account opening solution that involves direct support from our team and direct introductions to the banks of your choosing. It gives you instant access to the…
+ Direct support from a team of banking experts
+ Direct introductions to your desired banks
+ Answers to your most pressing questions and challenges
+ Expert insights on which banks to choose & why
+ Plus FULL access to our entire suite of account opening tools and intelligence!
And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
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