January 19 2016 Posted by Siemens Group
If you are a non-resident planning to purchase a property in Canada, either as a second home or as an investment, lenders will typically treat your application slightly more conservatively than if you were living in Canada. You willl typically be required to make a down payment between 30-35% of the value of the property that is being purchased, and likely more if the sale price is particularly high ($1 million or more).
The documents that most lenders will require to approve financing for a non-resident borrower are:
- A 90 day history of the funds being used as a down payment, including confirmation that the funds have been transferred into Canada. They may also ask you do document additional net worth.
- Income confirmation to verify the income as stated on the application. This can come from a job letter and pay stub, and be verified through regular deposits of the pay stubs into bank accounts. Non-resident borrowing programs are typically only offered on an income qualified basis.
- Confirmation of creditworthiness. If there is no Canadian credit history, the lender may require a credit bureau from the applicant's country of residence, a letter from the applicant's bank manager to verify creditworthiness, and/or other documentation to confirm that credit obligations are met consistently (such as confirmation of bill payments or payments made on an existing mortgage).
- If the applicant is a Canadian Citizen living overseas, some lenders require that the applicant be up-to-date on their Canadian tax filings, even if it is just filing returns verifying no Canadian income.
Non-resident applications represent a higher degree of risk to the lender due to challenges associated with foreclosure, if such a step ever were to become necessary. As a result, if you plan to purchase as a non-resident you should anticipate that the lender will do extra due dilligence to verify your capability and willingness to repay the loan. Each situation is unique, so please contact us with your details if this is an option that you would like to explore.