Where Can an Immigrant Afford a House in Canada?

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Do you dream of owning your own home? Is it getting harder and harder with each passing year to imagine living in your own home, as real estate prices continue to soar? And please don’t mention that house prices have recently come down in Vancouver. They’re still way beyond the reach of most of us hard-working, ordinary Canadians.

Do you dream of owning your own home? Is it getting harder and harder with each passing year to imagine living in your own home, as real estate prices continue to soar? And please don’t mention that house prices have recently come down in Vancouver. They’re still way beyond the reach of most of us hard-working, ordinary Canadians.

So, the question is: can you afford a home in Canada? That depends in large part on your salary and how expensive a home you wish to buy. But when you’re making the decision whether to buy a home in Canada you also have to take into account what you’re paying in rent. Because you’re going to be facing:

  • The cost of a down payment which we’ll assume is 20% of the purchase price
  • Any additional legal and administrative fees that you’ll have to pony up, and
  • Your monthly mortgage payments.

So, while you’ll be free of rental payments, you could end up paying more per month once you sign that mortgage and move into your own apartment or house. But here’s the thing, while salaries are fairly constant across Canada, living expenses and house prices are all over the place. As we mentioned here, in Canada’s larger and more expensive cities sometimes 2 salaries are not enough to meet your monthly living costs. If you’re struggling to meet your rent, how in the world are you going to handle a mortgage?

In other words, whether your mortgage payments end up being more than your rental payments or less than your rental payments often depends on where you live in Canada. What we’re going to do is run through 10 major Canadian cities and see where an average Canadian family with 2 income earners can afford to buy a home. And see what kinds of salaries they’ll have to earn to afford a mortgage.

 

Vancouver, BC

Vancouver via https://pixabay.com/photos/vancouver-british-columbia-1768956/

[Public Domain]

Sorry to start with the most expensive city in Canada but things will get better as we move down the list. Trust us. So, what we did was to use the Canadian Real Estate Association (or CREA) to find average home prices in cities across Canada. We assume a 20% down payment because putting less money down is going to increase your monthly mortgage payment and will almost certainly involve you having to pay insurance against a default. Or something of the sort. Remember the 2008 mortgage crisis in the U.S? Where people put 5% down on a variable rate mortgage and lost their homes when rates went up? You don’t want that happening, do you?

For rental payments, we used Numbeo’s data for Canadian cities and for average salaries for an occupation we used Statistics Canada. We also used TD’s mortgage calculator with a 5-year variable rate. Yes, it’s higher than say a 3-year fixed rate. But again, we wanted to estimate the higher range. If you can meet these payments, you’ll be fine when rates eventually start rising. And they always do at some point. This data helps us answer some important questions:

  • How much can you save on a monthly basis in order to make a down payment?
  • How long will it take you to save up for that down payment?
  • What combined salary will the two of you have to earn to meet your mortgage payments?

So, let’s start with the data for Vancouver, which has by far the most expensive real estate in Canada.

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$1,008,400 $201,680 $4971 $3674 $1297
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$20,000 $1250 10 years 3% $202,100

So, if you want to shell out 1 million to buy a cozy, teeny-weeny, bungalow somewhere almost hip and cool in Vancouver you’re going to need to start out with at least $20,000 in savings and then keep saving $1250 every month for 10 years in order to get that down payment. Unfortunately, if house prices in Vancouver keep rising over the next 10 years at a similar rate to the past 10 years, you’ll have to settle for a much cheaper-and-smaller-than-average home. But at least you’ll be a homeowner.

Good. Once you’ve made the down payment and signed the mortgage and moved in, you now have 25 years (the amortization period we chose to keep monthly payments at a fairly affordable level) of mortgage payments to look forward to. Notice that monthly mortgage payments on an average Vancouver home exceed the rental payments on a 3-bedroom apartment by $1297. Wow. That’s almost identical to what you’ll have to save in order to put together a down payment over a period of 10 years. So, you’ll hopefully have developed a habit of socking away over twelve hundred loonies a month. Because you’re going to have to keep that habit going once you move into your new home.

Let’s add it all up and see how much money you and your spouse have to earn to both save for a down payment and then to meet those darn mortgage payments. Every. Single. Month. For. The. Next. Twenty. Five. Years.

While we’re sticking with our fictional 3-person family, the fabulous Kumshars – Avid, Livid, and baby Priscilla – we use Numbeo’s monthly costs minus rent, for a 4-person family in Vancouver. Then we add rental payments on a 3-bedroom along with the monthly savings needed to make our down payment, adjusted upwards to ensure we also meet our monthly mortgage payments. Remember:

  • While saving for a down payment, Total Monthly Costs = Monthly Expenses + Rent + Monthly Savings
  • After signing a mortgage, Total Monthly Costs = Monthly Expenses + Mortgage Payments.

We use the more expensive of the two (usually rent + monthly savings) in order to calculate total monthly costs.

Then we compare that total to various salary combinations based on Statistics Canada’s averages for occupations in Canada, to see what combination of jobs are needed to afford a home in Vancouver.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4150 $3674 + $1250 $4971

$9121

Educational Occupation + Care Provider $5640 $3572 $9212

Guess what? You can buy a home in Vancouver. It will likely be a condo and may not even be a 3-bedroom one and may not be that close to Stanley Park or the shore, but it can be done! A teacher and a care provider earns you just enough at $9212. Any other salary combination that’s higher is a bonus. What it does mean is sticking to that all-important monthly savings plan of $1250. Either that or the Kumshars better hope their favourite aunt or their grandmother leaves them a nice inheritance. And they both have to have fairly well-paying jobs as can be seen from the various salary combo’s listed above. Even if one of the two has a senior management occupation that pays on average in Canada $7584 a month, it won’t be enough to meet their monthly budget of $9121.

Ok, so now understand how we arrive at our figures. Let’s head across the rest of Canada’s major cities in search of an affordable home!

 

Toronto, Ontario

Toronto via https://pixabay.com/photos/buildings-cn-tower-canada-colorful-2297210/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$789,100 $157,820 $3900 $3520 $380
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$15,000 $1000 10 years 3 % $160,330

Our second-most expensive city in terms of real estate is, of course, Toronto. But notice that rents are significantly cheaper than in Vancouver, as well the monthly mortgage on an average home in the city is much cheaper in Toronto. If you compare the monthly savings, you’ll need to get to the $157,820 down payment, it’s just under $1000 per month. That’s good news! It means that having disciplined yourself into setting aside $1000 a month in order to save up your down payment, you’ll actually be able to breathe a little easier when you move into your own home as your monthly total costs go down. So, what type of salary combo’s get you there?

Monthly Expenses Rent + Savings Mortgage Payments Total Mo’ly Cost
$4837 $3532 + $1000 $3900 $9369
Educational Occupation + Care Provider $5640 $3572 $9212
Educational Occupation + Middle Management (Retail) $5640 $5135 $10,775

There’s something a little odd going on in this table. Did you spot it?

Yes, monthly expenses in Toronto are about $700 more than in Vancouver, despite house prices being cheaper in T.O.  And rent is almost as expensive as in Vancouver. That means that your savings period is going to require a noticeably higher combined income than when you’re actually paying off your mortgage and living in your new home. In other words, your total monthly cost of $9369 is for when you’re saving up for your down payment. After you move into your home, your total monthly costs will go down to $8737, a drop of over $600. That means that the first salary combo (Education professional + Care Provider) won’t cut it during your saving-for-a-down-payment period but will do fine once you’re paying down your mortgage.

 

Victoria, BC

Victoria via https://pixabay.com/photos/british-columbia-parliament-victoria-481846/

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$690,200 $138,040 $3417 $2577 $840
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$10,000 $900 10 years 3% $139,575

Because house prices are a little lower in Victoria compared to Toronto, and noticeably lower compared to Vancouver, we can start with an initial savings of $10,000 and save $900 a month to get to our down payment of $138,040 with around a thousand dollars to spare.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4019 $2577 + 900 $3417 $7496
Educational Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500

Victoria is not a cheap city by any means, but unlike Toronto or Vancouver, your total monthly costs allow one of the spouses to have a lower-paying job, as shown by our spousal salary combo: Nursing Occupation + Service Representative/Customer Service. As well, your total monthly costs are almost identical whether you’re renting and saving up for a down payment or paying off your monthly mortgage bill.

 

Kingston, Ontario

Kingston via https://pixabay.com/photos/marina-harbor-kingston-ontario-379618/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$415,435 $83,087 $2068 $2075 (-$7)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $550 10 years 3% $83,796

Why in the world is Kingston fourth on our list?! Because house prices have skyrocketed in one of the country’s nicest cities and are now ahead of average house prices in Calgary, as well as ahead of those in Ottawa and Montreal, if not in Toronto. And if you know anything about Canadian geography, you know that Kingston is a reasonable drive from 3 of those cities as well as a short drive down the 401 to the last American exit. It seems people with portable jobs are leaving Toronto for the calmer environs of Canada’s limestone city. But even if homes are far more costly in Kingston than they were a decade or so ago, they’re within reach of many if not most working couples with a child to take care of.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3820 $2075 + $550 $2068 $6445
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care Provider + Service Representative $3572 $2972 $6544

What’s the main difference between your financial planning needs if you buy a home in Kingston compared to Victoria? It’s not just your job possibilities, seeing that both of you can earn below $4K a month although one of you has to earn at least $3.5K. It’s also the fact that your down payment is almost $55,000 less in Kingston. That means monthly savings of $550 will get you your down payment within 10 years. Or you could save a similar monthly amount to Victoria and get there in less than 7 years. It’s the sort of options that suddenly become available when average home prices are below half a million dollars. Additionally, once you sign the mortgage, your total monthly costs go down by about $500.

 

Ottawa, Ontario

Ottawa via https://pixabay.com/photos/ottawa-canada-city-urban-skyline-1863754/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$411,600 $82,320 $2050 $2159 (-$109)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $550 10 years 3% $83,796

As with Kingston, a savings plan of $550 in Ottawa will get you to your down payment in 10 years’ time. Or you can save around $900 and get there in 7 years. But that means your monthly costs go up by almost $400. The job possibilities are similar as well, with one spouse able to work at a lower-paying job and still contribute enough to meet total monthly costs as shown below. However, one of the wage-earners would have to earn around 5K a month to pay the bills.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4,068 $2159 + 550 $2050 $6777
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative Customer Service $5528 $2972 $8500

 

Calgary, Alberta

Calgary via https://pixabay.com/photos/calgary-canada-downtown-cities-70848/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$411,100 $82,220 $2047 $2055 (-$8)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $550 10 years 3% $83,796

Home prices in Calgary, on average, are almost identical to those in Ottawa. So, the savings plan is the same as Ottawa’s and Kingston’s: start with $5K and tuck away $550 for 10 years and you have a down payment ready to go. Now rents are a little cheaper in Calgary so total monthly costs are just a touch lower as we show below.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3,992 $2055 + $550 $2047 $6597
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500

As one can see, Calgary’s total monthly cost is a little more than Kingston’s but slightly less than Ottawa’s. The 3 cities form a cluster with remarkably similar costs so the same job combo that works in Kingston or Ottawa, is going to work in Calgary as well.

Call us at 1-866-760-2623 / (+1) 416-962-2623 or [email protected]

 

Montreal, Quebec

Montreal via https://pixabay.com/photos/montreal-city-building-cityscape-506130/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$360,900 $72,180 $1800 $2056 ($256)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $475 10 years 3% $73,290
$10,000 $425 10 years 3% $73,032
$10,000 $950 5 years 3% $73,184

With Montreal we now have the possibility of saving up for the down payment within 5 years if we choose to do so. It means taking on a monthly savings of $900 rather than $475 or $425 and it means starting with $10K instead of $5K. But it can be done. What kind of job combos work out? Let’s see.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3,696 $2056 + $475 $1800 $6227
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care provider + Service Representative/Customer Service $3572 $2972 $6544

Neither spouse has to earn close to $5K per month if they stick to a 10-year down payment savings plan. That means that it’s easier to find two jobs that will allow you – with a whole lot of patience and discipline – to buy your own home. Montreal is the first city on our list where that becomes possible. In addition, your total monthly costs go down by around $700 when you make the down payment and sign the mortgage.

 

Edmonton, Alberta

Edmonton via https://pixabay.com/photos/edmonton-canada-city-cities-77798/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$320,900 $64,180 $1600 $1908 (-$308)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $420 10 years 3% $65,585
$10,000 $370 10 years 3% $65,327
$10,000 $825 5 years 3% $65,083

As with Montreal, Edmonton opens up more options for a 2-income family to save enough for a down payment. For $825 a month of savings they can have their down payment saved up in 5 years and be moving into their new home. What kind of jobs will get them there?

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4,006 $1908 + $420 $1600 $6334
Educational Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care provider + Service Representative/customer service $3572 $2972 $6544

In Edmonton notice that just like in Montreal, you save about $700 in your total monthly costs when you sign the mortgage. Also, a working couple with a child have more than a few possible job combos that get them into their own home. Note that the 2nd lowest earning combo (Care Provider + Service Rep) gets them there. If they both work as service representatives then they’ll be a few hundred dollars short, so we left that job combo out.  We’ve come a ways form Vancouver’s tough-but-not-impossible housing market. Let’s see where we go from here.

 

Halifax, Nova Scotia

Halifax via https://pixabay.com/photos/halifax-nova-scotia-waterfront-2370263/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$315,313 $63,062 $1572 $1879 (-$307)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $420 10 years 3% $65,585
$10,000 $370 10 years 3% $65,327
$10,000 $825 5 years 3% $65,083

Halifax is almost identical to Edmonton when it comes to home affordability. Homes are just a few thousand dollars cheaper in Halifax and mortgage and rental payments are slightly lower. So naturally, the same options exist for saving up for that down payment. Whether jobs are as plentiful in Halifax as in Edmonton is up for debate. Both have fairly healthy local economies, if not on the scale of Montreal or Calgary, for example. Let’s see what job combo’s work in Halifax.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3935 $1879 + $420 $1572 $6234
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care provider + Service Representative/customer service $3572 $2972 $6544

Once again, your monthly costs drop by $700 after you sign the mortgage. Furthermore, the job combinations in Halifax are nearly identical to Edmonton. Unless both spouses work as customer service reps, they’ll be able to save up for a down payment and afford a 25-year mortgage on an average home. And remember, if they work at any job combo other than combo #7, they might be able to save up and take out a mortgage on a larger-than-average home. That’s a possibility that only really comes into being in cities like Edmonton and Halifax, and not the other cities we’ve already listed.

 

Winnipeg, Manitoba

Winnipeg via https://pixabay.com/photos/winnipeg-canada-night-evening-76909/

[Public Domain]
Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$314,081 $62,816 $1566 $1489 (-77)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $400 10 years 3% $62,783
$10,000 $355 10 years 3% $63,255
$10,000 $790 5 years 3% $62,815

Notice how much easier it is to save up for a down payment in a city like Winnipeg. If you can start off with $10,000 in savings, for example, then all you need to do between the two working parents is to save $790 a month. If you invest it at a quite reasonable 3% rate – you’ll have to diversify your investments a little but solid bonds and a few reliable dividend stocks and you can easily achieve this rate of return – then in 5 years you’ll have your down payment and be ready to move into your own home. What kind of job combinations do the trick?

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3484 $1489 + $400 $1566 $5373
Educational Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Customer Service Representative $5528 $2972 $8500
Care provider + Service Representative $3572 $2972 $6544
SERVICE REPRESENTATIVE + SERVICE REPRESENTATIVE $2972 $2972 $5944

Welcome to the city that lets 2 customer service representatives earn enough to buy a home! It also holds true that if one spouse has a pretty good job, like an education professional or a nurse, then a family can just about get by without the other spouse having to work.

The reason we can do this is not because homes in Winnipeg are that much cheaper than in Halifax or Edmonton. It’s because the cost of living in Winnipeg is noticeably cheaper than the other two cities, whereas average home prices are within a few thousand dollars of each other in all three cities. And that includes rent which on average is around $400 cheaper in Winnipeg than in Halifax or Edmonton. In other words, between the cost of living and rent you save almost a thousand dollars by living in Winnipeg. Does that make 30 below without factoring in wind chill sound a little more bearable?

 

So, as you can see, there are cities in Canada where you can still very much save up and buy a home. Sometimes with both spouses working at less-than-spectacular jobs. Or, in the case of Winnipeg, only one spouse working at a fairly well-paying job. And there are cheaper cities yet in Canada. You just have to be willing to move a little off the well-trodden Vancouver-Calgary-Toronto-Montreal path that most immigrants choose when settling in Canada.

So, it helps to know a little about where it’s easiest to buy a home when you’re considering which province in Canada to settle in. Remember a little planning can go a long way when you’re looking to buy a home in Canada.

Top 8 Steps for a New Immigrant to Buy a House in Canada

Congratulations! You’ve been offered a job and you’ve got your permanent resident visa that’s your gateway to Canada. Unfortunately, your job is in either Vancouver or Toronto, hardly surprising given the economic importance of both cities’ local economies. That means that your biggest challenge is no longer finding a job and getting that all-important visa.

It’s now finding a place to live.

And finding a home in Vancouver or Toronto is not easy, which is all the more reason you need a well-thought-out plan that provides you with clear steps to follow in order to find accommodation in Canada’s most expensive cities. Where to start?

 

Step 1. Get a Credit Rating

Wallet via https://pixabay.com/photos/wallet-cash-credit-card-pocket-1013789/

[Public domain]

Well before you even board your flight to Canada, you should start planning how to establish a credit rating in Canada.

Why?

Because that’s what financial institutions look at in order to pre-approve your mortgage. A pre-approved mortgage is basically how much the bank will lend you to buy your new home. In other words, unless you’re wealthy enough to pay cash, your pre-approval establishes how much you can spend buying a house or apartment. The better your credit rating, the higher your pre-approved mortgage. The higher your pre-approved mortgage, the more you can spend getting a bigger and better place to live. Even if you’re only renting, a good credit rating is a great way to help convince a Canadian landlord that you will be a responsible tenant.

  • For advice on how to establish a credit rating in Canada, see our blog on this here.
  • The more information the bank has on how you have dealt with prior financial obligations, the easier it will be for them to establish your ability to pay the down payment (at least 5% but up to 20% of the purchase price of the home) and meet your mortgage payments.

 

Step 2. Find a Rental while you build your Credit Score

First, you’ll have to stay in temporary lodgings while finding a place to rent where you can live until you can qualify for a mortgage and then purchase a home. You can stay at a mid-priced hotel or find a hostel at a number of sites, including here. Or you can you use sites like Airbnb, for example.

Next step is to find an apartment to rent, usually for at least 1 year until you qualify for a mortgage. There are a number of types of dwellings available including:

  • An entire house
  • A duplex which is normally a multi-story house divided into 2 dwelling units
  • A triplex which is normally a multi-story house divided into 3 dwelling units
  • A room in a house with shared bathroom and living facilities
  • A bachelor apartment with a single, combined living and sleeping room
  • 1 to 4 (usually) bedroom apartments.

To rent an apartment, you will need to find a landlord that will accept you without you having any references from previous landlords in Canada, which may involve additional searching for a landlord who will accept those without previous Canadian rental references.

Canadian landlords – in addition to references – will also usually require the following:

  • A letter from your current employer that indicates your income. Remember in Canada (as well as the USA) incomes are generally given on an annual basis – how much you make every year – rather than a monthly basis as the case in some other countries.
  • Several (if possible) months worth of bank statements that prove you have sufficient money to cover your first few months of rent (should you lose your job for example).
  • If you can, provide references as these are generally required. But, as stated above, as a recent arrival seeking your first rental in Canada, this is usually difficult if not impossible to provide to any prospective landlord.

 

Step 3. Get that Pre-approved Mortgage

Remember, that despite whatever steps you take, and depending on where you obtain your mortgage, you may have to rent for at least 1 year to build up enough of a credit rating in Canada to enable you to get a mortgage. While Canada’s financial institutions do have programs tailored to new Canadians, be prepared to have to rent for a period before purchasing a home on credit.

Genworth Canada, for example, has what they call a New to Canada program for mortgages for new Canadians. There are certain requirements, of course, including:

  • Minimum 3 months full-time employment in Canada;
  • International Credit Score (Equifax has an international credit report for businesses, but it is unclear if they can obtain personal credit reports from abroad);
  • As an alternative to an international credit score you can provide proof of at least 12 months of timely payments on things like:
    • Rental payments
    • Utility bills
    • Phone, internet, and/or cable bills
    • Car loan payments;
  • Letter of reference from a recognized financial institution OR 6 months of bank statements from your primary bank account.

As you can see, these requirements show that even for a special immigrant-centred mortgage program you will almost certainly need a period of time living and working in Canada in order to qualify for a mortgage, generally 1 year or more.

Regardless, you should check with whatever financial institution you will be or are using in Canada to see what kind of mortgage (and other) programs they have tailored to immigrants. Find out what the requirements are before even moving to Canada and then go about fulfilling them as quickly as you reasonably can.

 

Step 4. Know How to House/Apartment Hunt in Vancouver and Toronto

Let’s face it: Vancouver and, increasingly, Toronto, are among the world’s more expensive cities in terms of house prices. You will have to deal with what we call sticker-shock when seeing the prices of even modest homes in family-friendly neighbourhoods in either city. If you’re looking for a separate or semi-detached home, in many areas anything under CAD$1 million is a bargain.

That’s the bad news.

The not-so-bad news is there are somewhat more affordable options further from either city’s core.

The good news is the fact that the Canadian financial system is one of the most stable and efficient systems you’ll find anywhere. Once you have a rental and you get that all-important pre-approved mortgage (as we point out above), you now have a budget and can look for a home that you’ll likely spend a couple of decades paying down. That’s a good thing, by the way.

If you’re used to paying the full price outright for a house in your home country, get over it. (Unless you own a thriving business and already have the funds available, of course.) With both partners in a couple earning reasonable salaries, a mortgage is a way for you to get that home now, rather than wait years.

And that’s another reason you often need at least a year to build up your credit and get that pre-approval: you will need at least 5% of the purchase price as a down payment, so you have to start saving for that as well as soon as you arrive in Canada. If you have the foresight to bring additional savings from abroad into the country for that purpose, that immediately puts you a step ahead. Maybe it’s time to call Uncle Gupta in Mumbai and ask for a favour before even coming to Canada.

 

Step 5. Get a Real Estate Agent to Help You

So, it’s time to take a look at some of the not-so-incredibly-expensive and somewhat more affordable areas in Vancouver and Toronto. But to do that you really need a real estate agent, especially seeing you’re new to Canada and this will be your first home purchase in your new country. Find someone you can work with and with whom you the confidence that they will look after your interests and find a reasonably-priced home for you.

Here are some questions to ask any prospective real estate agent you’re considering working with:

  • How long have you been in business?
  • How many listings (properties) do you have that we can look at?
  • Who in their office will take care of our search for a home? Is it theme registered broker or a junior employee?
  • What commissions do you charge?
  • Given the goals you have, how will they help you find the home you want?

Once you’ve decided on a real estate agent, you can start looking for homes within your budget. There are several things to consider:

  • You will have to spend a lot of time – months often – to find a home that suits you.
  • Use your pre-approved mortgage amount as an absolute maximum. A newly-purchased home inevitably brings some unpleasant surprises that require fixing. And, in Canada, the buyers pay the land transfer tax. Plan to spend more money fixing your home than you had imagined necessary.
  • If the agent suggests requiring an inspection before completing your offer, you should agree. Having a qualified inspector review your home will help alert you to any problems that need fixing and may be a warning sign not to buy a property.

 

Step 6. Pick a Less Expensive Area in Vancouver

East Hastings, Vancouver by Canadian2006 / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)

by Canadian2006 / Wikimedia Commons / CC BY-SA 3.0

In the East, basically. West Vancouver (closer to the seafront in other words) is one of the more expensive areas in the world to buy a house. Average house prices are over CAD$2 million, with the exception of the University neighbourhood where they are surprisingly close to $1 million. Here are a few of the less outrageously-priced neighbourhoods:

  • Hastings neighbourhood in Vancouver East
  • Victoria VE in Vancouver East.
  • Collingwood VE in Vancouver East.
  • Renfrew VE in Vancouver East
  • Renfrew Heights in Vancouver East
  • Hastings East in Vancouver East.

These are neighbourhoods with house prices averaging around $1.5 million. Find that expensive? The better neighbourhoods in Vancouver West run from under $3 million to over $5 million. You may have to consider buying a condo which will bring you down somewhere in the mid to high six figures. Of course, those are for moderately-priced condos located away from prime areas. If want to pay well over $1 million for a condo, Vancouver has plenty of that as well.

Greater Vancouver had an average price of around $800 per square foot in 2019 while Vancouver itself had a price over $1,000 per square foot. So, for a 1,100 square foot (102 square metres) 2-bedroom condo, you’ll end up paying:

  • $880,000 on average in Greater Vancouver
  • $1,100,000 on average in the City of Vancouver.

Remember, you can do several things to lower those house prices:

  • Find a slightly smaller condo – you can live with 800 to 900 square feet. You may very well have done so with a family in your home country.
  • Look for places a little further from the city centre than you were planning. This will depend on where your job is of course and what kind of work your spouse will be doing as well.
  • As well, you can look to improve your credit score as soon as you are living, working, and renting in Canada. By doing straightforward things like paying your bills on time, keeping your credit card spending around 25% to 35% below your maximum allowable and avoiding taking out too many loans, you can maintain a healthy credit score which may result in a lower down payment when you take out your mortgage.
  • The difference between a down payment closer to 5% of the total price compared to 20% of the total price means tens of thousands of dollars you don’t need to come up with when signing your mortgage contract. And it can mean a lower mortgage rate as well.
  • Aside from making sure you understand all the closing costs involved in a mortgage, you may also qualify for the BC First Time Home Buyer’s Program which provides an exemption to paying the property transfer tax (PTT). There are a number of conditions to qualify including being a Canadian citizen or permanent resident and never having had an interest in a principal residence anywhere in the world. As well, it applies to properties under $500,000. Go here for more information.

 

Step 7: Or Pick a Less Expensive Area of Toronto

Regent Park by Stephen Allen / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)

by Stephen Allen / Wikimedia Commons / CC BY-SA 3.0

Toronto used to take a somewhat perverse pride in saying that they weren’t quite as expensive a city as Vancouver. That’s no longer true and now GTA has the dubious distinction of being ranked one of the world’s most expensive cities.

As well, it is estimated that the city alone has well over 100 distinct neighbourhoods with all kinds of options in terms of lifestyle and diversity.

Bottom line: you have to be patient, determined, and a little lucky to get a relatively affordable home in Toronto.

Here are a few neighbourhoods you might consider:

  • Regent Park: east of Cabbagetown and south of Gerrard Street, this neighbourhood had a bit of rough reputation centred on some of its public housing a few decades ago but, like everything in Toronto, it has been overhauled, transformed, and rebuilt. Yes, you can pay over $1 million in this area too, but there’s a slightly cheaper range of homes as well, especially condos.
  • Greenwood-Coxwell: in the East End of old Toronto, it’s a great location near the Don Valley highway for when you need to get the heck out of TO, a short drive or, rather, a reasonable bike ride from The Beaches, and just north of Leslieville. The Little India zone of restaurants and shops is right there and you’re on the Danforth/Bloor subway line. Again, there are plenty of homes over $1 million, but if you’re willing to live in a smaller home (say tucked beside a laneway), then you can find a few relative bargains.
  • The Junction: this is a unique mix of post-industrial converted warehouses and comfy brick homes on quite side streets, along with a lively area of shops, restaurants, and bars around the intersection of Bloor West and Dundas. It’s also where 4 railway lines intersect: hence the name. Want a cute 2 story, red-brick Victorian row house? $1 million plus please. Want a new condo in a wonderfully diverse and cool neighbourhood? You might nab something under $700,000.
  • Leslieville: east of the Don Valley, south of Greenwood-Coxwell, before you hit The Beaches, you’ll find this addition to Toronto’s gentrified neighbourhoods. The gentrification here happened much later than in most of the city’s neighbourhoods, in the 2000s and it retains more of close community feel than other places. Prices, given this is Toronto, are reasonable, with multi-bedroom homes closer to $1 million than to $1.5 million and up. And condos can be had for around $600 thousand and up, depending on the size.

 

Step 8: How to Close the Deal

Along with your real estate agent, make sure you’re aware of any and all closing costs that you will face when signing the deal before moving into your new home. These costs involve legal and administrative fees and can include:

  • Home inspection fee
  • Deposit on your down payment
  • Mortgage default insurance may be considered a closing cost (if your down payment is well under 20% of the purchase price, for example)
  • Land Transfer Tax
  • Legal fees for preparation & recording of legal documents
  • Title insurance against possible disputes over property ownership (often required by financial institutions who provide mortgage financing)
  • PST (provincial sales tax) on CMHC insurance: the Canada Mortgage & Housing Insurance Corporation insurance is financed within your monthly mortgage payments, but the provincial tax is not and has to be paid at closing time.

 

There’s a lot to keep in mind when buying a home, especially in a city like Vancouver or Toronto. You need to start planning before you even arrive in Canada, and then be persistent, patient, and on top of the all the details involved. Seek a trustworthy real estate agent and take the time necessary before making this key life-decision.

 

Buying a House in Canada for Foreigners (Top 10 Things to Know)

Thinking of buying an apartment or home for your children who will be studying at university or college in Canada? You’ll need to understand a few things about Canada’s real estate market, but when it comes to worrying about restrictions, you’re actually in pretty good shape.

While that may be a relief to you, it is seen differently by Canadians unable to afford a home in cities like Vancouver or Toronto, or even Calgary or Ottawa and Montreal. That means that there is pressure on politicians to place restrictions on foreign nationals purchasing real estate in Canada. But so far, the responses by government have been limited.

So, despite the fact that there is some anger Canada remains a fairly open market for home buying. In view of this, here are a few key tips on purchasing a home in Canada as a foreigner.

 

1. Canada is NOT Australia – You Don’t Have to Worry About Selling When You Leave

When it comes to foreigners purchasing real estate, Canada is not Australia. In other words, although some taxes and restrictions on farmland have been put in place in various provinces in Canada in response to surging real estate prices, we have still not put in place restrictions similar to what Australia has had since 2010.

In Australia, if you buy a home for use as a residence, you must sell it when you leave the country and no longer reside there. This was in response to anger at the fact that foreign buyers would outbid locals to purchase a home for their children to use while studying in Australia and then hold onto the home after the kids left, limiting supply and boosting prices.

In Canada, you have no such restrictions. You bought it, you own it, for as long as you wish. At least for now.

 

2. Beware of Mortgage Restrictions from Canadian Banks

GTD Aquitaine at English Wikipedia / Public domain

[Public Domain]

When it comes to foreigners purchasing real estate, Canada is not Australia. In other words, although some taxes and restrictions on farmland have been put in place in various provinces in Canada in response to surging real estate prices, we have still not put in place restrictions similar to what Australia has had since 2010.

In Australia, if you buy a home for use as a residence, you must sell it when you leave the country and no longer reside there. This was in response to anger at the fact that foreign buyers would outbid locals to purchase a home for their children to use while studying in Australia and then hold onto the home after the kids left, limiting supply and boosting prices.

In Canada, you have no such restrictions. You bought it, you own it, for as long as you wish. At least for now.

 

3. Beware the NRST in Ontario

In Ontario, you have the Non-Resident Speculation Tax (NRST) which is 15% of the purchase price and is paid by non-citizens who are also not permanent residents. The NRST applies to purchases in what is called the Greater Golden Horseshoe Region (GGH) which is a swath of land including Niagara Falls to the Southwest, all counties/cities up to the shore of Lake Ontario to the South, Orillia and Simcoe County to the North, and essentially Peterborough County to the East.

Here’s a map of the counties involved:

Map of the Greater Golden Horseshoe in Ontario © Queen’s Printer for Ontario, 2010

© Queen’s Printer for Ontario, 2010

If you purchase a home in the high-lighted area, then you are subject to the NRST.

Unless you are eligible for a rebate. Didn’t know that? Read on:

  • If you are purchasing a home for a full-time student who will be attending an Ontario post-secondary institution, then you are eligible for a rebate of the NRST. That means you have to pay the NRST, next provide proof that you or your child is a student at an Ontario institution and then receive your rebate.
  • Foreign nationals who become a permanent resident within 4 years of purchasing a property in the GGH are also eligible for a rebate.
  • Foreign nationals working in Canada on a valid work permit for at least 1 year (at least 30 hours per week for a total of 1,560 hours over a full year) are also eligible for a rebate of the NRST.

 

4. Beware of Rental Income Taxes

If you also rent out a part of that property – say a home is purchased for a student who will be attending college or university in a Canadian city and an extra bedroom is rented out to other students – then you may be charged a 25% tax on any rental income because the parents are a non-residential owner.

 

5. Beware of Special Property Taxes in Prince Edward Island

Buildings in PEI via Leonora (Ellie) Enking from East Preston, United Kingdom / CC BY-SA (https://creativecommons.org/licenses/by-sa/2.0)

by Lenora Enking / Wikimedia Commons / CC BY-SA 2.0

If you happen to be parents whose child will be studying in Prince Edward Island, then you will be charged a higher property tax and be restricted in terms of how much property and where you can purchase the property (especially for waterfront properties).

This is unlikely to affect many parents of foreign students, but it may influence your decision to study in PEI.

However, house prices in PEI are far below what you pay in places like Toronto or Vancouver and if you are looking for a university or college to send your kid to, PEI is hardly the top choice on your list.

 

6. Beware of Agricultural Land Restrictions

Farm via https://pixabay.com/photos/sky-nature-panorama-grass-3153572/

[Public Domain]

There are restrictions on purchases of agricultural land in Alberta, Saskatchewan, Manitoba and Quebec but these are unlikely to affect parents of foreign students in their choices of where to buy a home – unless you’re studying agriculture in a city like Lethbridge in Alberta, and wish to live on a real farm.

 

7. You MUST Come to Canada to Buy Your Property

Another obvious point that you may overlook in the hustle and bustle of planning to buy a home in Canada is that you will generally have to physically be in Canada at least twice during the process of buying a home.

  • You will need to open a Canadian bank account in order to get a mortgage on a property listed in Canada. This generally entails being present in Canada although some international banks like HSBC might allow you to open an account at their Canadian subsidiary without being present in Canada.
  • You will also need to be in Canada for the closing of the purchase of the home as non-residents cannot use a power of attorney for closing a real estate deal.

So, remember to pencil in these dates along with all the other dates involved in sending a child to post-secondary school in Canada.

 

8. Be Careful of Mortgage Term Limits

With regard to the term of the mortgage you take out, non-residents generally cannot hold mortgages with a term longer than 25 years. Again, this is a restriction that will have a low impact on most decisions seeing most parents will want to pay off their child’s Canadian home in much less than 25 years.

Some banks limit mortgage terms of non-residents to 10 years but check with your bank in Canada once you have opened your account to see what terms are available to you.

 

9. Establish Credit in Canada

As a non-resident, and as a foreign national, you will have to ensure you provide timely credit information so your Canadian bank can assess the financial risk you pose as a mortgage holder. This will include standard documents like bank statements and credit agency reports from your home country or whichever country you reside in and work or do business in.

But credit scores are not something you take care of and then forget about. It’s an ongoing process that you have to follow to make sure you build a strong credit profile – even before your child arrives in Canada to study. Here are a few tips for your kids or even for you to follow:

  • Get a Credit Card as soon as you open an account in Canada and use it frequently. This will provide a history of purchases and payments. Obviously, you should make sure you always pay down your monthly balances and at least pay more than the minimum balance.
  • Pay all and any bills on time and in full whenever possible.
  • Try to keep your credit cards to a manageable number. Only one or two are all you really need.
  • Follow your credit score on a regular basis. Go here for more information on how to do that.

 

10. Pay Your Bills

Finally, remember that along with your various utilities (light, gas, cable, internet, etc.) keep in mind that you have to pay property taxes usually on an annual basis, so it’s something you might need to set up reminders for along with the rest of your bills. There may be additional taxes – like a vacancy tax in Vancouver – that you should keep track of and make sure you always pay on time.

 

In the end, accessing a mortgage in Canada is a relatively easy process, open to foreign nationals and non-residents. For the purposes of purchasing an apartment or house for your kids to study here, there are relatively few restrictions – aside from a higher down-payment and somewhat shorter terms at the longer end of a typical mortgage.

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