If you’re not a resident of Canada and are trying to secure a non resident mortgage for a Canadian residential property, there are both bank or institutional mortgage financing options as well as private mortgage options.
In general terms, non residents can expect loan to value financing amounts up to 65% available from the available non resident mortgage programs on the market with amortization periods going as high as 35 years.
With respect to bank financing, while all mortgage lenders will have their own criteria for mortgage lending, there are certain basic requirements you can expect from any of these programs that offer non resident mortgage financing.
In addition to the real estate valuation assessment and loan to value determination, the next key lender focus area for non resident mortgage approvals is customer and application information verification.
Mortgage lenders will require that all information elements provided in a nonresident applicant package be verified via third party documentation and bank records.
The main areas of verification focus in on:
If the non resident applicant has not been able to establish credit in Canada, the mortgage lender will likely require a letter of reference from a foreign lending institution that the applicant currently has outstanding debt obligations with or has had in the past. Any level of Canadian established credit will likely be of benefit to the overall application.
From a private mortgage lending point of view, non resident mortgages can be arranged for a period of one year (most common) to a maximum loan to value of 75% (this will vary from private lender to private lender and their assessment of the property).
Nonresident residential mortgages from private lenders are equity based and non income qualifying. Therefore, the focus of the lending decision is on the market value of the real estate and the verification of all sources of funds as per international money transfer laws and protocols.
Interest rates for private mortgages will be around 10% with either an open repayment option or three months interest penalty.
Regardless of lender type, most if not all lenders will require that the mortgage closing be executed in person by the actual buyer or owner of the property. Its unlikely that a Canadian mortgage lender will allow the applicant to utilize a power of attorney for the closing process.
All correspondence for the transaction will need to be completed through a solicitor working on behalf of the nonresident applicant as well.
If you’re a non resident of Canada in need of a non resident mortgage on residential property located in Canada, we suggest that you give us a call and set up a time to go through your requirements with a member of our team.