The process of buying real estate in Canada is not as complicated as it seems at first. For non-residents, it may seem too difficult to deal with. Not all buyers are acknowledged with their rights, the local real estate regulations, and other small details. In this article, we are covering the most popular questions about the purchase of residential premises in Canada.
House-Buying Process for Foreigners in Canada
It is not very different from the same purchase process in the USA. There are a few steps to follow:
Simply said, that is how a usual purchasing goes. Keep on trying if your first offers are not accepted. Usually, a few negotiations are needed before handling the real estate sale. Even when the seller is negotiating with you, they ask for changing some of the requirements.
Usually, they are changing the pricing, the closing dates, the servicing, etc. With the right broker, bargaining won’t be too stressful but only profitable.
Residents can count on the rather easier purchase routines. Also, you save money on expenses that are not applied to citizens with residential status. We are going to review them later in the paragraphs below. The rank is connected with special rules to receive. Let’s see how a person falls into this category.
The applicant must spend at least 6 months a year in the constituency legally. If you live there less time, purchasing a house, owning a bank account, and other transactions are still available on special conditions.
A non-residential status gives you certain restrictions on holdings in some of the dependencies. The difference is in the amount of land and resources you afford. Normally, these restrictions are unobtrusive for those who are searching for a typical residence. In any province, you are permitted to buy the required amount of land. In case if you plan to get more than one house, gaining a residential status is necessary.
This point is the main difference between residential and non-residential deals. For the first kind, there is an 80% to 95% mortgage available with a 25-year term. If you are related to the second group of purchasers, only 65% of financing is available. Other 35% you have to pay with your funds. Generally speaking, the whole process goes a bit differently.
However, the procedure is similar for both residents and foreigners.
So, that is how the whole bank process looks generalized. It may seem complicated, but with a skilled helper, all steps are clear and understandable.
Except for the points we’ve already mentioned, there are some other details to remember about. Points change in different provinces, but we’ve made a general list. Here are the fees you pay in most situations.
In another way, it is called Property Transfer Fees. It takes 0.5–2% of the value of the total holdings. Usually, the cost is 1% of the first 200,000 $ and 2% for the rest. It is not applied in Saskatchewan, rural Nova Scotia, and Alberta.
Under special circumstances, you can escape funding for it. Since 2005, the Provincial Budget includes exemptions from the PTT for those who are buying their first house. Check the list of criteria to meet:
As we told you before, the seller finances it. Usual costs related to preparing and filing for a clearance certificate range from 300 $ to 1 000 $. For a complex transaction, it is expected that the amount will be at the higher end.
It is paid yearly to the municipal government or in rural areas to the county. Rates vary in each province and city, as the fee is levied within local communities. The final cost depends on properties value and other characteristics.
A 5% payment is required on newly constructed buildings. Sometimes, it is applied to buildings that are substantially renewed from purchasing conditions. Usually, the stated sales price already includes it, so you won’t notice it at all.
While acquiring a newly constructed home for less than 350,000 $, you may apply for a partial 5% rebate. The special condition is your right to rebate if you are planning to make this home a principal residence. For houses with the cost of 350,000 $ to 450,000 $, the rebate of the GST reduces proportionately. For lands and buildings that cost more than 450,000 $, a GST rebate is unavailable. To make everything clear, visit the CRA website. They answer everything to the point and fast.
It is invisible as it is already included in the final cost. Anyway, knowledge about price formation is useful. The PST varies from 0 to 10% in different regions. Today, only Alberta is free from those fees.
It is applied only in some regions such as Newfoundland, Ontario. and so on. This is the combination of two previous types: PST and GST. It is related not only to homes, but to most services, consumer products, and goods. Although, this tax demand costs that are connected with movable goods, such as commissions, art, etc. It is obtained by the Canada Revenue Agency and then sent to cooperating territories. Every region excluding Alberta has this or previous kind of fees.
Now you are acknowledged with the main rules of bargaining. Except for them, there are other requirements and difficulties. Please, keep them in mind before starting the purchase. We also advise collecting all documents you may need before the start. It is not a waste of time. Otherwise, missing papers are able to spoil the whole deal in the end or make it more expensive.
The first and the most obvious requirement for a sales contract is to contain all key information on the ongoing real estate purchase and sale procedure. All chattels like furnishing, devices, fixtures, and other additional parts should be described in the contract too. To finish the venture successfully, there are aspects to be confirmed:
After that, the contract is ready to be signed, and you get closer to your land or residential premises. All the agreement’s points must be implemented by both sides. Here you should provide your deposit. The merchant would receive it only in the final stage when you have already got your keys. If anyone tries to breach obligations, there are legal consequences. They could be applied to non-residents as well. According to the law, a buyer receives a damage claim and loses their deposit completely. Money safety is supported by a trust bank account which is set in the arrangement.
The account is usually owned by a realtor, and this is another point why you need an advocate presenting your interests. They complete all the bothering procedures where clients make common mistakes and the whole deal goes easier. And for listing the properties, a seller’s agent is usually responsible.
Every Canadian province sets its rules of estate bargain. A representative has to provide you with all the details of the house-buying process to make sure that you are ready. Also, an expert strives to make the result maximally profitable for you. As for a consumer, your representative’s fees are covered by a listing agent brokerage. As you see, you are not spending extra money at all.
The details we presented there may seem difficult and, of course, they are so. As with every big deal, this one should be checked properly many times. But, with a skilled property expert with you, it will necessitate a smaller amount of time and nerves. The main advice is to remember about variability. Every region has its law specificities. And, of course, remember the climate differences while choosing. Canada is huge, and weather conditions are not the same in Ontario, Labrador, and Nova Scotia.
Once again, find a Canadian specialist to track your way and explain local real estate features. With such serious preparations, you are likely to become a homeowner within the shortest time.
