Returning Canadian Homebuyers need to prove financial credibility

andres del risco

Returning Canadians who want to become homeowners may face a barrage of paperwork and checks in order to assure lenders of their healthy credit ratings.

Canadians who have had long spells working away from home may face a lengthy wait for a mortgage approval according to Ayaz Bhanji, a Mortgage Broker with Mortgage Intelligence in Toronto.

Those potential buyers who have used credit cards in Canada will already have access to a credit history, but they may still need to secure employment and amass a 20% deposit before returning home.

Transferring the deposit from overseas may also prove a stumbling block as strict anti-laundering laws mean Canadian banks must be able to identify the exact source of your money.

David Kuo, District Vice-President for Toronto at HSBC Canada, recommends sending money over to the country in installments:

"For example, the mortgage is $200,000 and I might have $50,000 slowly coming in from selling a property overseas," Kuo says. "I would lock in $150,000 [to a low fixed rate] and leave the $50,000 as an open mortgage or line of credit."

Kuo also argues that using a bank with an international presence, such as HSBC, may serve to smooth the progress of credit checks.

In the worst case scenario for returning Canadians, lenders may request six month mortgage payments into an account to act as security against their purchase, according to Bhanji.

The Mortgage Intelligence broker also recommends having a clear trail of paperwork to establish the origin of deposit funds:

"Some kind of paperwork that shows, say, they had property in Europe and they've sold it and these are the proceeds. A wire transfer from the originating bank helps as well."

Transferring money to Canada

If you are looking to invest in Canada, think carefully about how you will be transferring money to Canada. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are looking to send money overseas, to Canada for example – which you will inevitably have to do if you are looking to make a property investment - be sure to compare the market before you buy your overseas currency.

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