Buying a house in Canada is a simple process whether you are classed as a resident or non-resident. If you are a non-resident, this means you plan to stay in the country for less than 6 months per year but you are still eligible to open a bank account and you can still purchase property. Those who are considering staying in Canada full time or those who want to spend longer than 6 months per year in the country must apply for immigration status.
There is generally no restriction to foreign buyers purchasing property or land in most of the provinces although some do have limits on the amount of property or land that can be purchased. Those restrictions include the province of Alberta where you as a foreign buyer are only allowed to purchase a maximum of 2 plots of land which must not exceed 20 acres in total. In Manitoba, if you want to buy farmland then you must be living on the property within two years of purchase. Prince Edward Island has a rule that states non-residents wishing to buy land that has a shore front of greater than 165 feet, or any land area over 5 acres have to apply to the Island Regulatory and Appeals Commission prior to purchase. If Saskatchewan is the place you are hoping to live then you cannot own more than 10 acres of land as a foreign buyer.
The house buying process works in a similar way to that in the UK. In Canada you must choose a realtor. Where in the UK you may visit one estate agents office after another hoping to find the right property, in Canada you choose a realtor who will help you find the right home for you. Realtors in Canada do not just sell the property they list (as estate agents do in the UK). Realtors can sell property listed with other agents and in this case they split any commission they may receive from the seller for the sale. If the realtor sells you one of their own properties then they keep the full amount of commission they earn. It is possible for the listing agent and the buyer’s agent to be the same, but the agent must declare this fact to both parties before negotiations begin. The realtor is fully aware of property market trends; they can advise you on whether they believe the home to be on the market at a reasonable value considering the area and current market conditions. They can also advise you on what they believe is an overpriced property, whereby you may decide to offer a much lower price if it is a home you really want. All realtor fees are paid for by the seller so any advice you receive from them will be free of charge to you. As they are in the best position to know the local property market heeding their advice could prove extremely beneficial.
Finding out how much you can afford is the next step to buying your property. Before you find a home and make an offer you must first be ‘pre-approved’ by a lender. The lender will issue a certificate showing how much finance you have been approved for which allows you to negotiate immediately upon finding a property. Once you have been pre-approved for finance, the rate is held for three months which means any rises in interest rate will not affect you. The lender will consider many factors before approving funding. This includes your income and expenditure and will also take into consideration an independent appraisal of the property which in turn can be used to negotiate a better price with the seller if one is warranted.
Once you have made an offer on the property you must pay your deposit. Those in Canada with residential status can usually get finance for up to 75% of the purchase price meaning the deposit will be the other 25%, however foreign buyers will find they can only get finance for up to 65% of the purchase price and so must find the other 35% deposit themselves. Any offer on the property must be made in writing, once these have been agreed and the buyer has signed the document it becomes legally binding. If the buyer then has to drop out of the sale they can lose their deposit and possibly be sued.
The document should include everything that both the buyer and seller have agreed will be included in the sale such as carpets and other soft furnishings, white goods and any furniture or appliances. This is written on the document as ‘chattels included’. There will be two clauses included in the document which will state that the buyer can meet the financial obligations to make the purchase and that the sale is subject to satisfactory building inspections. Changes can be made to the document but must be initialled by the buyer and seller to show that the changes have been agreed by both parties involved in the sale.
Once both parties are happy with the agreement made regarding the purchase they can set a completion date (known in Canada as the closing day). This is the day that the money is exchanged for the purchase and the fees are paid to the lawyer. You can then collect the keys to your new home and make arrangements to move in.
There are many additional fees associated with buying a property in Canada, all of various values; these include property transfer tax (PTT), although this is not applicable in some provinces. Some buyers will be exempt from paying PTT if they meet the strict criteria. Some lenders charge the buyers for the appraisal fee so this must be confirmed so it can be taken into account when budgeting for expenses. Lawyers’ fees can vary so shopping around for a good deal is advisable. The seller may have an up to date survey already completed, if not the buyer must have one done at additional cost to themselves. If the buyer wants to have a full home inspection done prior to making an offer (like the UK surveys done prior to purchase) then they can, although this is optional it is strongly recommended.
Finding a lawyer in Canada is as simple as looking in the business directory. However, your realtor may be able to recommend a lawyer that they may have had dealings with in the past and whom they trust, so if you are new to the area it may be wise to ask your realtor for a recommendation first.