Janna and I first began our journey towards Canada in Spring 2021. At the time, we were interested in finding a place we would eventually decide to move to. We figured that perhaps we could rent it out until that time comes. However, we came across the first hiccup in what has certainly been a long process!
At the time, the federal government had recently launched legislation limiting housing purchases by foreign citizens. This legislation was set to begin on January 1st of the following year. This is the first thing you will need to know:
Called the Prohibition on the Purchase of Residential Property by Non-Canadians Act, the legislation prevents foreign citizens from purchasing properties — with specific exceptions. The legislation, which was set to expire in 2025, has been extended to 2027.
As a result, Janna and I recognized that if we were going to move forward with our dream, we’d need to act quickly. We found a nice home located in Dartmouth, Nova Scotia with the help of a local realtor, and set about looking to qualify for a mortgage.
Here’s a few other things for you to know: Unlike the United States, which is home to hundreds of national and state banks, as well as local credit unions, Canada’s banking system is much more consolidated. Canada’s major banks are called “the big five.” These banks are: RBC (Royal Bank of Canada) TD Bank, BMO (Bank of Montreal), ScotiaBank, and CIBC Bank.
We reached out to quite a few banks, but many either did not grant mortgages to foreigners or required very high down payments. We eventually received a connection to a banker at RBC Bank, who offered a favorable mortgage rate as well as a down payment of 20% (compared to some much higher percentages). We quickly began going through the mortgage process with RBC.
One of our bigger concerns was that since we were in a new country, we would have no credit. However, RBC (and a few others) are able to utilize the same credit companies (Transunion in our case) to run our credit scores. As a result, qualifying for the home was relatively easy.
Complications arose when we found out that we needed to already secure our closing costs in a Canadian bank. This became very challenging because Canadian banks require a SIN number (the equivalent of an SSN number in the United States). We eventually were able to open a bank account with RBC by calling the bank branch and asking for help. However, this is when we came across a second solution to our problems: Wise.com
Wise.com is a money transfer service that used to be called Transferwise. The company focuses on easily transferring funds between various countries by establishing banks in those countries. As a result, all we needed was proof that we had transferred the requisite funds to our Wise account, and we were ready to continue forward with the closing process.
Outside of this particular process, the remainder of the closing process was fairly straight-forward. We went through an inspection process, secured insurance on the property, and more. By the January deadline, we had finally closed on our home.
One last thing about purchasing a home here in Nova Scotia: Foreign investors must pay a much higher deed transfer tax than primary home purchasers, and beginning April 1, 2025, that number is even higher:
- Resident purchasers of property here must pay at Deed Transfer Tax of 1.5% (For a $500k home, this tax would amount to $7,500).
- Non-Canadian purchasers of property in Nova Scotia must pay a Deed Transfer Tax of 10% (For a $500k home, this tax would a mount to $50,000).
Clearly, the goal here is be considered a resident, especially given that if you are here, you are likely intending to be a resident. The most straightforward way to avoid this is by signing an affidavit of residence. The affidavit must include certain types of proof, including a SIN number, Drivers License, provincial insurance card (called an MSI card), or something similar. This is necessary for anyone who is not a resident at the time of the residential purchase, as you must prove you will be a resident within six months of purchasing the property.
Once I received my SIN number and was able to submit, we were excited to finally have this part of our journey behind us. In the next post, I’ll dive deeper into our process for gaining a work permit.
