How to Purchase Property in Nova Scotia
Nova Scotia is surrounded mostly by water so there is a large geological range of types of oceanfront. White sandy beaches to bath on, fossil laden sediment banks to explore, dramatic rock face to watch crashing waves, and lots of calm inlets to explore by kayak.
Depending on what type of property you are looking for may determine whether or not you would be paying all cash for a property or rather would need to obtain financing through a lender. Obviously, paying cash would be a lot simpler process.
Need a Mortgage?
If you need financing, then the first thing you should do is to contact a Canadian mortgage broker or bank. You will also have to have a Canadian bank account as well, through which the mortgage funds can be allocated if approved.
Most of the documentation required to get approved for a Canadian mortgage is the same for non-residents and foreigners as it is for Canadian citizens.
For non-residents the lender will most likely want an appraisal done of the property that you are interested in buying. Also, a copy of the property’s taxes, condo fees or Home owners association fees (if applicable) would have to included your mortgage application.
A reference letter from your home bank is required. You may also be required to verify no outstanding taxes owed and proof of assets in your home country. Last, but not necessarily least, you will need to provide proof of deposit, to have been in a Canadian bank account for 90 days.
As a non-resident, your loan may require:
Larger Down Payment:
- For U.S. residents, at least 20% down payment is required, from one’s own resource
- If you're living anywhere other than Canada or the U.S., a minimum 35% down payment is required, from one's own resource
- The intended down payment must be available in a Canadian Bank account prior to the mortgage being funded
- Your down payment cannot be in the form of a gift, and proof of funds for 90 days prior to financing is also required
- If you already own property in Canada, a 35% down payment is required for your next property
Proof of Income: A recent paystub, along with a letter of employment from your current employer confirming the length of time at the company, your annual salary including bonuses, and confirmation that you are not on probation.
Proof of Credit: If a Canadian Credit bureau is not available to you, then an international credit bureau or letter of reference from your current bank is required.
Availability of Funds: Some lenders may require a year’s worth of mortgage payments to be retained in a Canadian bank account before approval.
IMPORTANT: If you are considering buying an income property as a non resident, keep in mind that you will be required to set aside 25% of the income for paying any government taxes that may be incurred when selling the property.
In Nova Scotia, for anyone buying a property, there is a one-time deed transfer tax on the purchase price payable on closing to the property’s municipality. These taxes range from 1-1.5% depending on the Municipality as each Municipality sets their own tax rate. Check here for locations. This is not annual property taxes. It helps the Municipalities track and set the assessment amounts for properties as they sell. May 2022 saw the implementation of 5% non-resident deed transfer tax in addition to the municipality deed transfer tax. Find out more about that here.
Once you have mortgage pre-approval in place, you can start looking for properties. Keep in mind, mortgage approval will not be given until the lender receives an accepted offer of purchase and can determine if the property you want to buy is worth their risk. Even then, if any financial changes are made prior to closing, if large enough, it could still be declined so actual mortgage approval happens on closing day.
If you already are familiar with Nova Scotia and know which area you would like to focus your search, then you can start your search by contacting me. I offer a Collaboration Centre that will provide exclusive access to your own portal to the MLS system. There, you’ll be able to sort properties and leave notes for your future reference and share with me and anyone else on your journey. The more I get to know your likes/dislikes the better your chance of finding your ideal home.
If you need guidance on which community may be best for you, you could reach out to local groups such as professional associations on linkedIN, MEET UP or search interest groups in Nova Scotia to reach out for referrals for communities or ask me. I’ve lived here all my life and know about many areas or know where to get the information.
January 2023 will see a pause for two years on foreign buyers from buying property in Canada for investment purposes with no intention of occupying the property. Read more about that here.