Blog by Chloe Cartwright, BSW, RSW, ABR

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Correcting Mis-information

     I have been a full-time professional licensed Realtor in Alberta since June of 1991.  In November of 2003 I re-focused my practice from being a traditional Seller's Realtor and became an Accredited Buyers Representative specializing in helping newcomers relocate to the Province of Alberta.  In the past 7 years I have been asked several times about the following false and misleading assertions made by others about purchasing property in Canada.  I would like to set the record straight and but an end to this non-factual information.

1.  Do I need to be a Canadian Citizen to purchase property in Canada? 
The quick answer is NO!  (* but with a Caveat if you are purchasing over 20 acres). If you are a non-resident of Canada and want to purchase Canadian property and if you are a cash buyer or have 40% or more as down payment you can purchase property as a non-resident and use it for vacations or for revenue.  It is not even necessary to visit the property.  With 40% down you will likely qualify for a mortgage - but this does depend on your income, other outside debts, etc as outlined below in Qualifying for a Mortgage. 

     If you are in Canada on a Temporary Work Visa with at least 1 year remaining before your visa's expiry you can purchase property with a down payment of 20% or more.  You may qualify for a mortgage if your income and outside debts meet certain criteria as outlined below under Qualifying for a Mortgage.

      If you are a Permanent Resident of Canada you can purchase property with as little as a 5% downpayment. Again your income and other outside debts must meet the criteria as outlined below under Qualifying for a Mortgage. 

     One of the sources of this misleading information regarding newcomers to Canada obtaining mortgages arises because of the stand conservative banks take when you do not have a Canadian credit rating.  These banks frequently tell newcomers to open an account, obtain a Canadian credit card and prove yourself as responsible for a year - then when you have a Canadian credit report they'd be happy to consider your application.  Another source of misleading information comes from an Immigration Consultant at a seminar in the UK where I heard this individual say "you must have a 35% down payment to buy a house in Canada".  This statement is grossly misleading, please do not take these kinds of statements as fact.

WELL!  Forgive me if I am a little biased here but most bankers are on salary! They receive the same income whether they assist you or not!  So they are not about to go out of their way helping you - nothing in it for them.  The solution to this is to work with a Mortgage Broker, one who is paid by the banks to bring in qualified applications.  A well versed, experience Mortgage Broker will be able to interpret your existing credit rating (from your country of origin) or banker's letter and add that important credibility to your application.  This simple act can result in your earlier ability to purchase a home, even before you land if you like!  As far as the Immigration Consultant's statement is concerned - I can only surmise what their motives would be.  

2.  Qualifying for a mortgage.  Canadian Lenders operate in a very above board and conservative fashion.  In order to qualify for a mortgage you must demonstrate that your down payment was legally obtained by way of home sale, savings or gift, that the mortgage payment (Principal and Interest) does not exceed 32% of your gross (before tax) income, and that your total debts (mortgage, credit cards, loans) do not exceed 42% of your gross household income.

3.  Do I have to pay off the mortgage before I am 65?  NO!  In Canada your mortgage amortization period is not affected by your age.  You may amortize your mortgage for as long as 35 years.

*Caveat - a word on when the information is partially true.  In order to purchase 20 acres or more in Canada you MUST be either a Canadian Citizen or a Permanent Resident of Canada.   This is due to foreign ownership laws detailed in these publications:  Agricultural and Recreational Land Ownership Act, the Foreign Ownership of Land Regulations and the Land Titles Act.
If you are interested in purchasing more than 20 acres it is possible by becoming a share-holder in a Canadian Corporation that has land as an asset.  A Canadian or Canadians must be the majority share-holders. 

see also:  Applying for a Mortgage               
               Check List for Mortgages

Mortgage Application process

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