Mortgages in Canada

Suppose Canada’s many virtues have attracted you to want to buy a property there. In that case, you should also be pleased to know that the country has typically operated an ‘open door’ policy for foreigners wishing to own a home there.

If you’re looking at buying a house in Canada from the UK, you’ll first need to know more about the rules, how much you’ll likely be able to borrow, and how to secure a mortgage. Read our guide to find out more.

Can UK residents get a mortgage to buy a property in Canada?

The simple answer is yes. Generally, it’s achievable, so long as you are considered an attractive borrower and are granted approval with a lender following eligibility and affordability checks, as you would be required to do elsewhere.

There are certainly extra factors to take into consideration as a non-resident and borrowing from overseas, though, such as having an accessible credit history that’s recognised among Canada’s lenders or understanding the different legislation in different provinces. Gaining the expertise of a mortgage broker who specialises in the Canadian market will help you overcome any challenges you might face.

How do mortgages work in Canada?

Firstly, you should know that you will need to get a mortgage with a Canadian lender rather than a UK provider, as foreign lenders are not permitted to register mortgages in the country. This inevitably means that there will be extra checks, detailed documentation to provide, and potentially even interviews to ensure you are a legitimate and suitable borrower, which will pose little risk to the lender.

Despite this, the eligibility criteria should be relatively the same as they are at home: your credentials will be scrutinised for income, affordability, credit history, type of employment, age, and what kind of property you want to buy.

Because of Canada’s ‘open door’ policy, you won’t need a visa to buy property in the country and can even stay there for up to six months without having to apply for one. However, you might be liable to pay additional taxes as a non-resident (non-resident speculation tax—NRST—is typically between 20% and 25% of the purchase price, depending on which province you’re buying in).

Deposit

This area is where getting a mortgage in Canada for foreigners is different. Most Canadian lenders will only lend up to 65% of the cost of a property to non-residents, meaning you will need to have a deposit of 35% if you’re buying from the UK.

High loan-to-value (LTV) mortgages are also lawfully required to have mortgage loan insurance, so you should factor this into your overall budget. This policy offers the lender a degree of security, which could result in better interest rates on your mortgage.

How a broker can help to get a mortgage in Canada

The support, insight, knowledge and practical assistance of specialist Canada mortgage brokers will be invaluable when making such a bold step as buying a property across the Atlantic. Knowing how the mortgage market works in the country and what’s involved with borrowing as a foreigner is crucial when taking such a huge long-term financial commitment, and, like most Britons, you’ll likely need to outsource this.

An experienced broker will help you understand what evidence you’ll be expected to present (proof of income and deposit, bank statements, a reference letter from your UK bank, proof of a Canadian bank account, etc.) and what extra costs you should consider (different land taxes in different provinces, home inspections, home insurance, legal fees, new-build taxes, etc.).

Contact us on 0330 818 7026 for a free initial consultation to match you with the right specialist broker, or make an online enquiry.

How much can you borrow?

You’ll need the insights of a professional broker who will take on individual factors and nuances to your circumstances, as well as the current market fluctuations, to truly ascertain how much you’ll likely qualify for. However, if you’re at the start of your Canadian property journey, you can get the ball rolling with an estimate via our affordability calculator.

Which lenders offer Canadian mortgages?

First and foremost, you should make sure you are dealing with a legitimate lender with a good reputation. While your broker will know which organisations are above board, you may still have to make decisions based on the type of lender you use.

This is because there are several different institutions that provide mortgages, as well as banks and building societies, in Canada, including trust companies, pension funds, finance companies, and ‘caisses populaires’ (a type of credit union). The Canadian Mortgage and Housing Corporation has a comprehensive list of approved lenders under the National Housing Act.

Generally speaking, you should find that Canadian mortgage rates are similar to those in the UK.

How does buy-to-let work in Canada?

The Canadian Government has taken a hard line with any foreigners investing in property in the country for two years in an attempt to solve the housing crisis and property price explosion since the start of the Covid-19 pandemic. A law is in place which prevents any non-residents from buying homes in metropolitan hubs such as Toronto, Ontario and Vancouver.

If you wish to buy outside of these provinces or buy once the Act has expired, you should speak to your broker about how the current buy-to-let landscape looks before proceeding. Suppose the province you wish to buy in is open for business.

In that case, there are certain limitations you may face if you don’t intend to occupy the property or questions you’ll need to answer about whether you’ll need a commercial mortgage.

Speak to a broker who specialises in Canadian mortgages

You can get all the answers you need and the support you’re looking for with one of our specialist Canada mortgage brokers. With experience and insight into how this non-resident borrowing works, getting matched to the right advisor will make all the difference to your peace of mind and the ultimate outcome of your pursuit of buying a home in Canada.

To find out more about how one of the fully qualified five-star brokers in our network can help you, call 0330 818 7026 for a free initial consultation or make an online enquiry.