Mortgages for non residence of Canada can be arranged through a wide variety of Canadian mortgage lenders, which is good news for non residence that are looking to finance a Canadian real estate property.
And the rates and terms that can be secured can also be very attractive. The only major financial requirement is that the down payment or equity in the property is between 35% and 50%. Credit and cash flow for repayment will enter into the equation for better rates and terms, but the most important funding requirements is going to revolve around the equity.
So from an application and approval point of view, the process can be fairly straightforward to complete.
What can be more challenging is getting the mortgage agreement completed and the funds disbursed.
Canadian lenders will only be working in Canadian funds and the payments made will need to flow through a Canadian bank account.
So a non resident would have to set up banking in order for the cash flow requirements of the loan or mortgage to be met.
In addition, most if not all lenders in Canada that will fund mortgages for non residence will require the actual borrower to sign the mortgage documents prior to funding.
Powers of attorney for instance will not be acceptable to complete the process.
This will typically require the borrower to need to travel to Canada at the time of closing to execute all the documents in person.
Another procedural requirement can be that all correspondence related to the mortgage will be conducted through the borrower’s solicitor to ensure a proper and complete communication record is available to the lender.
This provides the bank with a certain amount of protection against fraud and improper representation of the information required to complete the process.
Because of some of the added procedural requirements for a non resident mortgage application, the time to complete the application and funding process will be slightly longer than for a Canadian resident and should be built into the process by the applicant.
The best way to efficiently manage the mortgage process from beginning to end is to work with an experienced mortgage broker who has successfully placed non resident mortgages for his or her clients.
If you are looking into mortgages for non residence of Canada, I suggest that you give us a call so we can go through your requirements together and discuss the different mortgage options available to you.
Like any other type of home or condo mortgage financing program, the cheaper sources of money are going to come from bank and institutional lenders.
Banks and other institutional lenders will have the same basic qualification requirements for non residents as they do for residence including proof of income, proof of net worth, third party valuation of security, good credit standing, and so on.
From a leverage point of view, a bank will not go quite as high in terms of the leverage on a non resident mortgage Canada. For a conventional mortgage to Canadian residents, the loan to value ratio for uninsured mortgages is regulated at 80% and can go as high as 95% for insured mortgages. For non resident mortgages, the high end of the lending range is more like 65% loan to value.
The other biggest difference between resident mortgages and non resident mortgages from banks and institutional lenders is the level of verification that is required for identity, income, and assets of the applicants. The process for verification is much more thorough and exact for non resident applicants which can add some time to the process.
If a Canadian non resident is either looking to locate and close a residential home mortgage quickly or do not have sufficient verifiable income to qualify for a bank mortgage, then a private mortgage from a private mortgage lender is also an option to them.
A private mortgage is basically a home equity loan of sorts in that the lending decision is based on the strength of the security value and the basic financial and credit profile of the applicants.
Private lenders can also go as high as 75% of the value of the real estate for non resident mortgages. This of course will depend on the individual private lender and their own direct assessment of the financing opportunity.
For non residents that are looking to acquire real estate for investment and only have a short time to close on an offer to purchase, a private mortgage may be the best option in that it can be arranged quicker than a bank mortgage, increasing the probability that the deal can get closed on time.
Private mortgages for non resident mortgages are typically for one year in duration and serve as a short term financing option that will likely need a residential or home mortgage refinance action to be taken if the property is going to be held for the long term.