Planning your finances before buying property in Canada
We talk you through the financial matters involved in purchasing property in Canada.
There are a number of financial matters involved in emigrating to another country. Before you fully begin your buying journey, you need establish if it’s financially viable. If you decided to proceed you need to know how you will fund your purchase. Here are some of the major financial considerations when buying in Canada:
If you are a current homeowner, you know how many costs are associated with purchasing property that go above and beyond the price tag of the property.
How will you finance your move?
Before proceeding with all of the steps involved in moving to Canada, establish how you will fund the purchase. Perhaps you’re funding the purchase from savings, or an inheritance? Or perhaps you will need to rely on securing a mortgage? If this is true, it’s important to have a mortgage approved before you begin your property search. It shouldn’t be a problem securing a mortgage with a Canadian bank, provided you pass a credit check. You must also provide proof of income and supply the required deposit. If you’ve only just arrived in Canada, you may have to pay a higher deposit amount of up to 35 percent. Once you’ve supplied the required documentation, you should know within 48 hours whether you’ve been approved. Bear in mind that you can’t obtain a mortgage for a Canadian property from any bank that’s outside of Canada.
To speak to a mortgage adviser about what works for your individual circumstances, contact the Resource Centre on 020 7898 0549.
When buying property in Canada, there are a number of taxes you will need to budget for. For example, if you are going to rent out the property, you will need to pay income tax on that rental income, even if you aren’t a permanent resident in Canada. You also need to budget for transfer tax, which is based on the value of the property, and usually amounts to around 1 percent on the first $200,000 (approx. £115,150) and 2 percent on anything above that amount. You might be able to dodge this tax depending on your individual circumstances, i.e. if you are a permanent resident, and don’t own property anywhere else in the world. Contact your provincial government directly to establish your liabilities.
As each individual’s circumstances differ depending on assets and income, we recommend consulting a tax specialist to ensure your affairs are in order.
You will also need to alert the Inland Revenue to your change of circumstances, which will ensure your liabilities are up-to-date. As each individual’s circumstances differ depending on assets and income, we recommend consulting a tax specialist to ensure your affairs are in order.
When making such a significant purchase in a different country, you need to consider how inheritance tax might affect you. You must also take out a will in Canada to ensure the best interests of your loved ones are protected.
Avoiding hidden costs
If you are a current homeowner, you know how many costs are associated with purchasing property that go above and beyond the price tag of the property. You need to factor in legal fees, buying costs, maintenance costs, and any budget for renovation. If you’re moving to Canada too, you will also need to budget for the relocation. For a thorough breakdown of all of the ‘hidden’ costs associated with buying in Canada, download our free Canada Buying Guide today.
Transferring your money overseas
It’s important to establish a sensible currency strategy when transferring your money between the UK and Canada to start your new life there, or when repatriating funds back to the UK. Because exchange rates move up and down by the minute, there is an element of risk involved in exchanging your pounds for Canadian dollars and sending them to your new home. If you’re transferring your life savings to fund your new life or to purchase a property to live in, even a small fluctuation in the rate could significantly dent your emigration budget or drive up the cost of your property.
It’s important to establish a sensible currency strategy when transferring your money between the UK and Canada
To ensure more of your money moves across the Atlantic with you, speak to a currency exchange specialist. We recommend our trusted partner Smart Currency Exchange. You will be assigned a personal trader who will constantly monitor the currency markets on your behalf. Using this knowledge they will devise a bespoke currency strategy that protects the value of your currency transfers from market movements. For example, to help you budget effectively Smart Currency Exchange can lock in an exchange rate for up to a year using a Forward Contract, effectively securing the price of your Canadian property or the value of any other transfer.
Save money when buying overseas
Whether you are buying a property abroad, making regular payments, sending money overseas or back in to the UK, you want the most cost-effective, safe and easy way to transfer your money.
That's where Smart Currency Exchange can help. As one of the UK's fastest-growing currency exchange specialists, we save our clients thousands of pounds every day by minimising the risk associated with transferring money overseas.