Advice for Visitors to Canada
How to Buy a House in Canada
When buying real estate, you do not want to make any mistakes. Being well-informed is key. If you are visiting the country, and want to buy a house in Canada, it is smart to be aware of the financial and legal aspects involved. For ample information on visiting Canada, see www.visitorstocanada.com.
Find Yourself a Reputable Agent
Real estate agents are ideal guides in the purchase of real estate. They prospect for the buyer, act as negotiator between buyer and seller, and advise in the completion of the transaction. They must hold a license issued by their provincial real estate board, assuring you that they are trained agents, well-informed on the subject of how to buy a house in Canada.
When you first meet with a Canadian real estate agent, it is required that he present to you a pamphlet that explains the nature of his relationship with you and the extent of his responsibilities to you. The basic obligations of the agent are to protect and promote your negotiating position at all times, abide by your instructions (providing they are lawful), respect all confidences, and account for all funds placed in their possession while acting on your behalf.
Real estate brokers are audited once a year to confirm that they are following regulations enacted by the province. The provincial commission has the right to impose fines, suspend or revoke licenses to those who are not abiding by the rules.
Many provinces require real estate agents to have an insurance policy that protects purchasers in the event of errors and/or omissions with regard to real estate transactions. In such a case, the insurance company would typically compensate the purchaser for the agent’s mistake. Some provinces have a recovery fund to indemnify clients who are victims of fraud, resulting in a financial loss caused by a real estate representative.
Real Estate Rules for Non Residents
Since the tragedy of 911, a national agency called Fintrak collects data on real estate buyers, requesting their current address, passport identification, and driver’s licence in order to verify their status. The purpose is to ensure that money is not laundered in Canada for terrorist activities or other nefarious endeavors that would threaten the country’s security under the mask of real estate dealings.
You should endeavor to put down as much money as you can afford towards a down payment - the larger the down payment, the lower the monthly mortgage payment.. If your down payment is less than 25% of the purchase price, your mortgage loan will have to be insured with a mortgage insurance company. Since this involves another outside service, additional legal fees would be required for the loan application, and an insurance premium (a certain percentage of the loan amount) would have to be budgeted.
Canadian citizens are allowed to withdraw up to $20,000 from their Registered Retirement Savings Plan (RRSP) to buy a house, without having to pay taxes, and are permitted 15 years to reimburse this amount without having it become part of their gross annual income. It is possible that non-residents wanting to buy a house in Canada may also be able to withdraw money from their country’s equivalent of the Canadian RRSP program. It might be worthwhile to research the availability of this financial option in your country of origin.
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