Home Finance Guide To Canadian Properties Investment

Guide To Canadian Properties Investment

by Carol Ferrell
Canada Flag 3D Rendering on Blue Sky Building Background

We see too many people migrating to Canada these years. Just like the USA, many have begun settling down in Canada. The reasons might be many, but we guess the fundamentals, the rules and regulations might be flexible for all of them. What do you think?

As the trend is setting in, many are even investing in properties there. Properties are of few types if you wish to own them for personal residence reason, owning for commercial purpose, owning for the rental purpose to fetch income and so on. Based on the reason you wish to buy, the buying options also changes.

Facade of a house, Charlottetown, Prince Edward Island, Canada

Are you one of them, looking at buying a property in Canada? Are you a resident there? Are you a Non-resident, a foreigner? Well, though the rules are pretty flexible, the regulation for owning property by non-residents of Canada varies slightly. In Canada, whoever doesn’t stay for over 6 months in the state, they are considered as Non-Residents. So, you can own a property easily, be it a non-resident foreigner, or just a non-resident who will live there later. Wondering whom to approach and get the details? Why search elsewhere, when we give exactly what you are looking for?

Read further to know and learn about all that you needed to know about buying properties in Canada, making investments in the real estate sector of the Canadian market.

Everywhere on the globe, real estate sectors are on the swing, the reason being many of them want to own properties and think that is the smart investment.

So, let’s come to Canadian rules and regulations in investments on properties.

Unlike the mortgage for a principal residence, the place where you live permanently, buying a property for investment purpose, expecting returns to generate income has a different set of rules and the process is slightly complex.

Woman with a bicycle in front of houses, Charlottetown, Prince Edward Island, Canada

It depends on the number of units you are looking for; example 1-4 units are purely residential. It also depends on whether you live in one of the units or you rent out completely. All these factors determining the finances that you can be expecting to get from banks or other lenders for your investment.

Investing in property

As we said, the first thing to consider is the number of units that your property will have or has. The property with 1-4 units is qualified for residential property. The qualification for getting finances from lenders is slightly more difficult than the mortgage that you might have on your principal residence.

With more than 4 units, even 5 is considered as a commercial property and hence you have to get a commercial mortgage or commercial property loan. This is even tougher to get, it has many qualifying criteria’s to be met.

If your property is multi-unit like apartments, then there is another set of factors that define the financing options. If you are occupying one of the units in the property, then it will be considered as owner-occupied property. If you are not living in one of them, renting it out completely, then it is considered as non-owner occupied.

The major difference between the 2 is that the down payment differs largely.

Rules on Down Payment

Basically, non-owner occupied property needs at least a minimum of 20% of the total amount as the down payment.

In case if you are thinking of occupying one unit, then it reduces to a 5-10%.

Amortisation period

In finance terms, this is actually the time taken to pay back the loan or mortgage loan taken.

If your down payment is less than 20%, then your amortisation period is nearly 20-25 years.

In case you pay more than 20%, up to 30% and above, you are eligible for amortisation period of 30-35 years.

canada flag montreal urban buildings vector illustration

Qualification for Investment property Mortgage option

You need to provide your lender all the below details when you are opting to get a mortgage over investment property.

  • Agreement of Purchase and Sale
  • Proof of sizeable Down payment
  • Proof for existing renters, if there are any
  • Proof of steady income, in the form of letter of appointment from job or anything similar to self-employees
  • Zonal documents to prove that you are buying a residential property and not commercial

Mortgage Rates:

The rates for the amount taken by you from the lenders varies anywhere between 2% to 4%, depending upon the lender type and your property

Mortgage Insurance

Mortgage insurance, default insurance exists to reduce the risks to lenders. There are different rates and slabs for owner occupied and non-owner occupied properties, be sure to have a check.

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