In Canada, thousands of cosmopolitans get an opportunity to get residency. They spend a considerable amount to pay rent, and at the end of the day, they are left with nothing. They work hard and save money to get a house; when it comes to buying a house, numerous thoughts start hovering in their mind. Whether as immigrants, can they purchase a home or if they are eligible, how much they are required to pay upfront? In this blog, we would answer some frequently asked questions to buy a house in Canada.
1. My name is Martin, and I am a Work Permit Holder. I have been living in Canada for the last three years and working at ABC company. I want to buy a house up to $500,000. How much I need to pay upfront?
Based on this scenario, you can buy a house with 10% down payment ($500,000*10%=$50,000) from Traditional Lenders. As you are not a Permanent Resident, you must pay 15% Non-Resident Speculation Tax (The Government of Canada has enforced Non-Resident Speculation tax, as of April 2017, to limit the number of foreign buyers. This step was crucial as the price of houses surged up and created problems for Canadian citizens, especially Millennials) of the Purchase price ($500,000*15%=$75,000).
Also, you would need between 2% ($500,000*2%=$10,000) closing costs of the purchase price. You must have ($50,000+$75,000+$10,000=$135,000) to purchase a house of value $500,000.
However, you can apply for reimbursement of Non-Resident Speculation Tax once you get Permanent Residency (conditions apply, call for details). You would have 90 days from the day of obtaining permanent residency to apply for a refund.
2. My name is Bob, and I live in South Africa; however, I want to buy a house in Canada. I do not have any credit history and work record in Canada. Is that possible, can I buy a home?
Yes, Bob, you can still buy a house in Canada. You might have to pay 35% down payment to buy a property as a non-resident, and you might secure a mortgage from Traditional Lenders. As you are not living in Canada, you are liable to pay 15% Non-Resident Speculation Tax along with the closing costs (between 1.5-3% of the purchase price).
3. My name is Danish, I live in Dubai, but my daughter is studying in Canada at an accredited university. She wants to buy a house, and she is wondering, what are the requirements for her to buy a home?
• Must be 18 years old.
• Money for the down payment must be deposited in a Canadian bank before the closing.
• As a non-resident, you will have to come up with a minimum 35% down payment to purchase any property in Canada. If you are buying any property in Ontario, you must pay an additional 15% Non-Resident Speculation Tax.
• The house should be entitled under her or both you and your daughter’s name.
• The house must be her principal residence.
• You might have to act as a guarantor or co-signer to help her with down payment and monthly mortgage expenses.
• Banks might need to verify your international credit report & income documents.
Here are few tips for someone looking to buy a house in Canada.
1. Build up your Credit history-
-Open a Bank account
-Get a Credit Card, gradually increase the limit.
-Pay your utility bills, Rental bills etc., on time.
-Avoid repeated Credit Checks to keep your score intact.
-Do not go over your credit card limit. For example- if your credit card limit is $1000, try not to go over 30% of the limit; try to use it wisely to get a good credit score.
2. Save money for Down Payment-
As a first-time homebuyer (Permanent Residents), you can buy a 5% Down Payment house. If your down payment is less than 20 %, then it is called High Ratio Mortgage and CMHC insured as well. You can buy a home at 5 % down payment upfront, but you are also required to get Mortgage default insurance from CMHC. This insurance protects lenders if buyer defaults in making a payment.
Additionally, government plays a crucial role in helping new home buyers to buy a house. You might be eligible to get a first-time homebuyer incentive. It is a shared-equity mortgage with the government of Canada. Ask a Mortgage Professional for details. As a first-time homebuyer in Ontario, you are eligible to receive a rebate on Land Transfer tax. Please review the requirements below for first time homebuyer rebate.
Requirements for First-time homebuyers’ rebate
• Canadian citizen or Permanent resident
• At least 18 years or older
• After purchasing property, live in it within nine months.
• Never held a property before
• Must apply for the rebate within 18 months of the purchase of the property.
Fortunately, first-time home buyers get an opportunity to receive a rebate of maximum $4,000 on the land transfer tax in Ontario.
Can gift funds be used as a down payment?
If you are a permanent resident or a citizen, the gift from the family in the form of down payment money will be accepted by most lenders. A donor is usually required to provide a gift letter to confirm that the money is a proper gift and not a loan. For mortgages with less than 20% down payment, the homebuyer must have mortgage loan insurance provided by CMHC, Genworth, or Canada Guaranty. However, if you are an overseas investor(non-resident) or on a work permit, all the down payment must be from your own savings.
3. Find an Accredited Mortgage Professional-
Mortgage Professional helps you to arrange a mortgage for your house. Depending on your credit history, you can get financing from well-recognized financial institutions.
4. Find a Real Estate Agent-
Before you find a Real Estate Agent and start looking for a property, please come to us for a free mortgage assessment and pre-approval based on your income and credit history to save your time. Getting a pre-approval helps to know the estimated amount you can be approved of. After you have been pre-approved, your realtor will help you find the house as per your needs & budget.
5. Get Pre-approval done-
A pre-approved mortgage suggests an interest rate guarantee from a lender for a particular period, usually 60 to 90 days and for a fixed amount of money. The pre-approval is calculated based on the information and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would typically be things like written employment, income evidence and down payment from your capital. Most Real Estate Professionals will make sure you have a pre-approved mortgage before showing you properties available for purchase. This confirms that they are offering you property within a given price range.
To sum up, as a New Immigrant to Canada, one of your top financial goals likely is to own a home. MB Mortgages is here to advise you on your affordability, credit history and many mortgage products available to us as a Brokerage. We are Mortgage Professionals and can offer you mortgage solutions based on your affordability at the best rates.
Why choose us-
As a leading Mortgage Brokerage, we have strong relations with multiple banks and numerous lenders. We work with Canada’s leading lenders to provide you a mortgage solution that fits your budget. Our mortgage and financing process is amazingly simple, we represent you and match you with the best suited mortgage as per your needs. This way we can guide you through this complicated process with our years of mortgage financing experience.
• We are dedicated and professional Accredited Mortgage Brokers in GTA.
• We are well trained and have experience in the mortgage financing field more than 10 years.
• We can shop around with different lenders to get you the best possible mortgage rates and conditions as well.
• We have different options for different income and credit level with access to number of private lenders to suit borrower’s needs.
We are a professional mortgage broker in GTA. We can help you secure a mortgage with best mortgage interest rates. We are located at 2 County Court Blvd., Suite # 438, Brampton, ON L6W 3W8. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: [email protected] or you can visit our website at www.mbmortgages.ca
The information provided in this blog post is intended to provide general information. You should consult with a mortgage professional to fully determine the scope of your situation. MB Mortgages shall not be held liable from usage of the information provided on this page. Individual situation may vary.