If you are from outside of Canada, and would like to purchase property in Mississauga, there is good news: You can do it! You do not need to be Canadian to purchase property in Canada. But you should be aware of a few things before proceeding... Foreign buyers of Canadian property generally fall into three categories:
- Non-resident investor
- Non-resident vacationer
- Planned permanent resident
Most of you reading this now should fall into Category #3, because you likely found me while researching potential schools for your children. And that's great! I'm always willing to help out those who are looking out for their children. Naturally, first of all, if you plan to be a permanent resident of Canada, especially if you are a foreign buyer, you should visit Citizenship and Immigration Canada at www.cic.gc.ca to fully understand your requirements and processes. And 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. There are two kinds of lenders I want you to be aware of:
"A-lenders" are big-bank mortgages, and if you can put a down payment of 50% on a property, you have a great advantage. Because you can put so much money down, A-lenders will most likely naturally assume that you are very low-risk, and you should be able to receive the same low-interest mortgage that most working Canadian residents can receive. If you can only afford to put 30% down or less, you can still get a mortgage, but it will likely be with "B-lenders", those financing companies that are in the business of taking on a greater risk, and thus have higher interest rates. If you can only afford to put less than 20% down, then under Canadian law, you must take on Mortgage Insurance. And 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
Additonally, if you can only produce a 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
And, if you can only produce a 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
There are many confusing terms associated with Canadian Mortgage Law for International Buyers that you should familiarize yourself with, like Payment Hypothecation (six months pre-paid, collected as an advance and put into trust, typically released after 12 months of satisfactory repayments) and 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). Of course, me and my stable of trusted professionals can always help you out with this! 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. 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. Should you have any other questions regarding the information on this page, please do not hesitate to Contact Me!!
