Buying Property in Canada
Buying property in Canada is very easy for expats and a viable option for those living in the country long-term. Canada has an open-door policy for foreign property ownership, and affordability is also an attractive feature, as Canadian housing prices are generally lower than those in other comparable global destinations.
When it comes to buying or owning property in Canada, non-residents have the same rights of ownership as residents and citizens of Canada. From a residency point of view, if expats plan to stay in Canada for six months or less each year, the government considers them a non-resident, which means they can still open a bank account and buy property. If, however, a person plans to live in Canada for more than six months per year, they must apply for immigrant status.
The current housing market in Canada is definitely a buyer’s market. Home prices have been dropping, even in larger cities such as Vancouver and Toronto. Many expats buy a second home in Canada as a destination retreat. Since Canada is such a large country there are many options for expats; from the East Coast, to Central Canada and the West Coast. Toronto and Vancouver are the most expensive cities in which to purchase property, but there are many other cities such as Calgary, Montreal, Winnipeg, Saskatoon, and Northern Ontario to choose from.
For foreigners not currently living in Canada it may be wise to engage a lawyer or notary public in their home country to assist with the paperwork from the Canadian banks and Canadian realtor. An international real estate lawyer with a thorough understanding of Canadian real estate rules would be an ideal choice.
Where to start looking for property in Canada
Expats should first decide on the location and type of home they would ideally like. It is important to take into consideration the many different climates across Canada when choosing where to buy property.
When it comes to the type of property, choices include detached homes, attached townhouses or condominiums (apartments). There is a wide range of choices within these groups so one can narrow criteria by factoring in the number of bedrooms, baths and amenities that are neccessary.
House hunters should start by searching online to get an idea of available properties.
Properties are also advertised in newspapers; local community papers have weekly real estate sections which advertise local properties, but these are not normally as comprehensive as online portals.
Financial considerations for buying property in Canada
For a non-resident, financing is available at 65 percent of the purchase price with 35 percent as a down payment. Expats need to apply directly to the bank for the loan and qualifying for mortgage financing requires interviews via phone, fax and email to gather personal information which includes assets/liabilities, income verification, tax returns and credit information.
Foreign banks cannot register mortgages in Canada, so any mortgage would have to be raised by a Canadian mortgage broker or bank. 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.
In order to determine the mortgage amount one needs to borrow be aware of all closing costs, including:
- Purchase price
- Property transfer tax – paid by the buyer at one percent of the first 100,000 CAD, and two percent on the balance
- Bank appraisal fees (not always required)
- Inspection fees
- Insurance costs – Vary depending on the property and the policy required
- Closing legal fees
Steps to purchasing property in Canada
The purchasing process is the same across all Canadian provinces, and the transfer process usually takes between 60 and 90 days. If the property is vacant it could be closed within a month.
- Find a local realtor to begin the search. Realtors are licensed real estate professionals who will source properties, act as a negotiator with the seller’s realtor on the buyer's behalf, and advise in the completion of the transaction. A realtor will also act on their behalf to locate the best property. Realtor fees are paid by the seller upon completion of the sale of the property.
- Get prequalified for a mortgage from the bank so you know exactly how much you can afford and can then narrow the properties list down.
- Have a local realtor preview all properties, with you if possible, to locate the most suitable home.
- Once the buyer has located the property they wish to purchase, they should have the realtor write a contract of sale and purchase agreement. Once the document has been signed by the the buyer, the realtor will present the contract to the seller's realtor. The contract should include detailed information the land title search and a home inspection, as conditions will be have to be approved before the the transfer of funds.
- Have the realtor contact the appointed Canadian real estate lawyer or notary public for conveyancing of mortgage, transfer of monies and your registration on the property, upon your signed removal of the subjects in the accepted and signed contract of sale and purchase.
- Move in on possession day and enjoy a new home in Canada.