Expert: Cinzia Dalgarno - 11/30/2009

Question
Dear madam,could you please provide me information on buying a property in Hamilton Ontario Canada whilst living in Uk.I will be buying the property for renting out,how much downpayment would i need and could you give me any more info about purschasing property in Canada that would make it easier for me to buy as i dont think i could afford 35% down payment.
Thanks A.Hall. (UK)

Answer
Hello Andrew.
As you will see from past answers on this same subject, a non-resident buying a home in Canada faces certain guidelines:
-if the home is to be a "second home" you could get up to 75% financing, at discounted rates.
-if the home is to be a rental property, the most you could get is 65% financing, although that will be at premium rates (up to 2 1/2% higher than discounted rates); most likely however, the maximum mortgage you will be able to get for a rental property will be at 50% Loan To Value.

I'm sorry, there is no easy way around this.

Aside from coming up with a suitable downpayment, you will need a few documents handy, in order to make the application faster, smoother, and more likely to be approved. Lenders love it when clients are prepared! The documents you should have are:
-Banker's Report. This is in lieu of a credit bureau report. You bank will know what this is, they prepare it for you, it's basically a one-page letter.
-income confirmation - current paystub and job letter would be fine.
-confirmation of downpayment - lenders in Canada require 3 months statements proving that the money has been in an account in your name, for at least that long. This is due to money laundering and fraud issues.
-networth statement - a list of your assets and liabilities will speed things up.
-you will need to have an account in a Canadian bank, into which you will deposit the downpayment. Some lenders require that you have 12 months mortgage payments in that account, up front.
The process will work like this: you find a mortgage broker to process your mortgage; they will find a lender who will give you a mortgage, send in all the necessary documents; the lender will send the mortgage to a lawyer/notary of your choice (in Canada) who will then email you the documents you have to sign; you will take those docs to a lawyer/notary in the UK, who will ensure all is done according to the Canadian lawyer's instructions, and they will then email/fax back the docs to the Canadian lawyer.

Hope this is helpful to you,
Cinzia