To put it simply at the very beginning, in Canada, purchasing property is relatively easier when compared to other developed countries. From the point of residency, if you are staying in Canada for less than six months a year, then you will be considered a non-residence by the Canadian Government, which still makes you entitled to buy property and open bank accounts in the country.
Only when one is planning to stay in the country for over six months a year, they have to apply for immigration. Legalities aside, before you go rushing towards those land for sale signboards, take a little step back to go through all the other aspects of real estate purchasing in Canada.
Here are the primary and vital aspects of buying land in Canada that are to be considered before entering a negotiation:
• Finance: For non-residents, Canadian lenders charge a bigger amount of down payment to finance their real estate purchases.
The amount is usually 35% cash and the required documentation generally consists of verification of income, tax returns, and report from either the credit bureau or bank stating that all accounts are in good standing in present, confirmation of down payment via bank statements, copies of 2 ID proofs and appraisal of real estate.
In Canada, you would need to raise any mortgage via a broker who’s Canadian, because mortgages here cannot be registered through foreign banks. The mortgage approval usually takes 24-48 hours after the submission of application and documentation to the lender.
As the borrower, you will need a lawyer from Canada or notary public for preparing the documents necessary for the mortgage, as well as to supervise the registration procedure at the office of Land Titles.
It is possible to have the documents couriered outside of Canada for signing given the necessary arrangements are made prior to the date of completion.
• Insurance: As a non-resident, it might be harder, and possibly more expensive for you to insure your property investment. Since the proof of home insurance is necessary to raise a mortgage, insurance is a mandatory consideration. For example, to purchase an investment property in Toronto, you have to get insurance quotes and information before making an offer.
• Making an Offer: Thanks to technology, nowadays, one can easily sign the legal documents to make an offer for a real estate purchase online, while being able to rely for the same estimation and advice from their realtor through video calling.
However, many lenders still do require a non-resident buyer to sign the paperwork of mortgage in person and the only alternative to that is an executed Power of Attorney.
Apart from the mortgage and the taxes, other additional expenses that come with the purchasing of land in Canada include realtor’s fee, appraisal fee, survey fee, home inspection fee and Condominium (Strata) fees.
Majority of the Canadian provinces do not limit the foreign ownership of real estate, some exceptions do exist where there is an existing restriction on the amount of land or property a non-resident can purchase.
Non-residents are subject to a Non-Resident Speculation Tax of 15% on the purchasing price in provinces like Toronto, Hamilton, Niagara, Waterloo, Wellington, York and a few more.