Canada Mortgage Rates and Foreign Buyer Rules: Who Can Buy and Who Can Borrow

The Prohibition on the Purchase of Residential Property by Non-Canadians Act took effect in January 2023. It was extended to 1 January 2027, and at the time of writing the government has not confirmed whether it will be renewed, replaced or allowed to lapse. A review is under way, and commentary suggests a new framework is being considered that could channel foreign capital towards new construction. Check the Department of Finance or Justice Canada before relying on this.

There are exceptions, including for some work permit holders, students, refugees, certain spouses of Canadians and buyers of land for development. The ban applies to residential property and does not cover most commercial real estate. Penalties include fines of up to CAD 10,000 and an order to sell. Our Canada consultation guide covers ownership questions, and the Canada property page shows listings.

Even where you may buy, provinces tax foreign buyers. Ontario's non-resident speculation tax and British Columbia's foreign buyer tax have been the best known, and municipal levies can add more. Rates and exemptions change, so ask a real estate lawyer to quote the tax before you make an offer. Land transfer tax applies to everyone, and Toronto adds its own.

Banks will generally ask a non-resident for a deposit of 35% or more, which leaves a loan of around 60-65%. Insured mortgages with small deposits are not available to non-residents. You will need to show income from outside Canada, a clean credit record and the source of your deposit. Some lenders will not deal with non-residents at all, and a broker who specialises in them saves time.

Canadian loans work differently from most countries. The amortisation, up to 25 years, is the full repayment period, while the rate is set for a term, commonly five years, then renewed at the going rate. Fixed and variable options exist. Prepayment penalties on fixed loans can be large if you leave early. Test payments with the mortgage calculator.

Gather proof of your eligibility to buy, such as a work permit or confirmation that an exception applies. Add tax returns, employer letters, six months of statements, and the paperwork behind your deposit. For funds coming from abroad, banks look at how long the money has been in your account and where it came from. Translate documents not in English or French.

Where purchase is permitted, many buyers use cash. Others borrow at home to fund the large deposit, then take a smaller Canadian mortgage. Private lenders will lend to those who do not meet bank criteria, but charge more and may demand fees of a point or two. Currency matters: your deposit and repayments in Canadian dollars expose you to exchange moves. If commercial property is your aim, the ban does not apply the same way, so look at commercial listings in Canada and speak with a lawyer about structure.

Rather than guess what policy will be, plan for either outcome. If the ban lapses, foreign demand may return and prices could firm up in popular cities. If it is replaced with a rule limiting purchases to new construction, apartments and houses off plan would be the route. Keep your documentation ready, speak to a lender who handles non-residents, and watch announcements. You can also see apartments in Canada and houses, or use the contact page to discuss your position.