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Getting a Mortgage In BC, Canada: A Non-Resident’s Guide

non-resident mortgage

The Post-Pandemic Housing Market in BC 

Despite high real estate prices, ineffective regulation, and a lack of unbiased info, Canada continues to attract a large volume of real estate deals even following the Covid-19 pandemic. But with so many buyers investing in a wide range of residential, commercial and industrial properties, can Canadian non-residents get a piece of the pie too? In today’s blog we’ll discuss what mortgage options non-resident buyers have in BC’s current housing market.

British Columbia’s real estate market may have its share of downsizes, but the pluses are too good to ignore. The cities are beautiful and clean, the countryside is green, and getting a Canadian residency is a breeze thanks to the ease of legal requirements. 

All these positive aspects have turned BC into one of the most desirable real estate markets in Canada, making it a great location for those who live here without citizenship. It’s no wonder why the housing market in BC continues to stay competitive, even following the COVID pandemic.

With the current real estate high prices being likely fueled by a post-pandemic boom, the housing market has seen an increased number of deals in the past few months.

Other than these, there’s a significant buying demand based on non-citizens’ foreign money, with much of it coming from mainland China and the United States.

Metro Vancouver Rising Real Estate Costs 

As David Ley has observed, over the last few decades, Metro Vancouver has become similar to Hong Kong, Singapore, London, and Sydney when it comes to rising housing costs. These high prices are fueled by high immigration-driven population growth and foreign investors. But apart from the wealthy foreigners that buy luxury properties in cash, there are also many non-residents in need of getting a home loan to complete a purchase.

In the next few sections, we’ll explain the various types of mortgages available for non-residents, the conditions that need to be met, and the steps to apply for a loan. We’ll also discuss what type of lenders to approach and the costs involved in getting a mortgage if you are a foreign national.

Can You Get a Mortgage As a Non-Resident Or a Non- Permanent Resident?

Non-resident buyers are met with few restrictions when looking to apply for a mortgage in BC, Canada. It’s worth mentioning that when we refer to Canadian foreign nationals, we are not only talking about people living abroad.

Banks consider citizens of Canada who haven’t resided in Canada for more than half a year to be non-residents too. Thus these individuals, together with resident aliens, will also be subject to the 15% non-resident speculation tax. 

In addition, if you are a foreigner looking to buy a property with a Canadian permanent resident, banks will still treat you as a non-resident and make you subject to the same requirements, including a higher down payment. 

Non-resident Home Loan Taxes And Rates

Regarding taxes, apart from the non-resident speculation tax, after taking possession of your property you’ll need to pay land transfer taxes, as well as yearly property taxes. Both of them can be significant and depend on the size of your property. For a more accurate estimation, you can check the British Columbia Property Tax Calculator.

Whether you choose a fixed rate, variable, repayment, or interest-only rate, to approve a home loan most A-lenders require non-residents to provide a minimum down payment of 35%. The good part is that non-residents are eligible for the same interest rates as Canadians, provided they meet the mortgage loan eligibility criteria.

To get a mortgage in BC, Canada, as a non-resident, you need to choose a lender and provide the following:

  • a 35% down payment
  • a reference letter from your bank
  • a Foreign Income Verification Statement, showing assets
  • a CRA Form T1134, Information Return Relating To Controlled and Non-Controlled Foreign Affiliates.
  • an employment letter stating your income in Canadian or US dollars
  • three months of bank statements
  • a Canadian credit check.

The problem when working with A-lenders is that obtaining a home loan in BC, both as a resident and a non-resident, can be hard right now.

Mortgage lenders want to know everything about you these days. This includes your age, marital status, income, gender, if you own other property, and so on. What’s more, each bank has its own rules. Some are less strict, while others require a different down payment according to your home of residence.

But what to do if you don’t comply with B-20 guidelines? 

broker providing a home loan for non-resident buyers

Alternative Non-Resident Mortgage In British Columbia

As a non-resident, applying for a mortgage when you don’t fit the bank’s guidelines can easily turn into an impossible endeavor. To avoid hardship, it’s always recommended to work with a professional mortgage broker when buying overseas. 

Your broker will not only handle most of the paperwork for you. They’ll also help you access private lenders and alternative forms of lending, and compare the best interest rates in BC. You’ll get all the information you need from them regarding the standard financials, extra charges, and the taxes involved. Overall, a broker will help you have a much stronger understanding of the terms and conditions before signing.

If you don’t qualify with the banks due to a low credit score or a poor credit history,  B- lenders won’t ask you to provide a ton of paperwork and will only require:

  •  35% down payment from non-residents
  •  40% to 50% down from Canadians that live abroad but do not reside in Canada, or those that don’t file taxes in Canada

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Wrapping Up 

If you are a non-resident looking to get more advice regarding mortgage options in BC, don’t hesitate to get in touch. I would be more than happy to learn about your current situation, answer all your questions, and lead you on the path to homeownership in Canada.

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