Foreign Property Mortgages for Canadians

International/Overseas Mortgages for Canadians

First Published: ADawnJournal.com April 22, 2010

Recently released figures suggest that Canadian households have in the past five years increasingly sought to buy properties abroad to add to their own property in Canada. Whether these properties are used for holiday purposes, as a retirement nest-egg or bolt-hole, or merely as an investment, there is a clear benefit to those who can afford it from buying a foreign property for their own reasons. In many countries, it is possible to pick up a bargain – some places will even offer up a number of properties that an assiduous saver could arguably pay for up front in cash. Between this and the comparatively inflated “First World” property markets, however, there are many places where a property can be picked up for a good price, but will still require some borrowing for a purchase to be made.

Getting a mortgage to buy a property abroad is not as straightforward, generally, as finding one to pay for a domestic property. Clearly, it is more so than it used to be – Canadians who wanted to buy foreign properties used to have to find a way around the mortgage question if they wanted to avoid paying large premiums on top of the principal. The evolution of the global mortgage market has reached a point where it is now more than possible to find the right mortgage. Due to financing guidelines it is tricky to get a mortgage in one country for the purposes of buying property in another, so this development has made a big difference for people looking to get into the international property market.

If possible you should always try to get a mortgage in the same country as the property you intend to buy. It may cause a little bit more difficulty up front, especially if there is any kind of language barrier, and if there is such a barrier it is worth getting all documents legally translated as an extra cover for you. However, being able to deal with the bank face-to-face when you are at the property and carrying out any deals connected to it will be to your advantage. As a foreign buyer you will need to provide stronger guarantees to demonstrate your commitment to the property. You may need to put up a larger deposit than a national of the country where you are buying the house or condo, but bear in mind that you are buying a piece of real estate that could cost several times more in your home country and it will not seem as big an issue.

As banking has become more and more internationalized, it may well be possible – and beneficial – to source a deal in your home country to take out a mortgage in the foreign location. Most banks will have a presence or a sister bank in other countries, and if not they will at least have some level of collaboration with banks in those countries. This can make the whole process move a lot more smoothly, and can see you secure a good-value mortgage for an excellently-priced property.