Non-Resident: Financing and Transferring Funds into Canada
From the perspective of the Buyer’s realtor, non-resident financing and transferring funds into Canada are two areas that require special attention. The process is documented on this page.
Important: in 2023 and 2024 there is no Foreign Buyer Ban in Whistler. Everyone is able to buy real estate in Whistler. This post is for non-residents of Canada who are considering buying real estate in Whistler. It covers the basics of financing and the transfer of funds.
Buying. Owning. Selling.
If you are a non-resident Buyer, do yourself a favor and read the following pages. It helps to stay informed.
- Non-resident: Buying
- Non-resident: Buying Process
- Non-resident: Finance and Funds
- Non-resident: Owning
- Non-resident: Taxes and Fees
- Non-resident: Selling
- Non-resident: FAQ
Table of contents
FAQ
Yes. Whistler is exempt from the 2-year ban (2023 and 2024) by the Federal Government on real estate investment by non-residents.
No. It is the same Buying Process for Canadians.
No. For Canadian banks to refinance after purchase is non-compliant with the Canadian Government FINTRAC regulations. They will not have complete assurance of the money trail.
No. It is actually a sliding scale after the house value of $1.25M CAD. It is essential to talk with a mortgage broker.
That condition will be stipulated by the bank. Not all banks, but some insist on this practice. To sign, you may have to return to Canada, not Whistler. Make sure you understand your obligations.
It is essential if you do not want to have to return to Canada to transfer funds or sign the mortgage documents if the bank does not require you to sign in Canada at one of their branches.
Yes, if you are seeking financing from a Canadian Bank, it is good to have a history with a bank. If you are paying cash, you can transfer directly to the lawyer’s trust account. However, opening a Canadian account is a good backup plan
Professional Services
Canadian Bank Account
Plan to open a bank account on your next visit to Whistler. Start using the debit card for even small transactions. Transfer money into your new account. If you are a couple, and both of you plan to be on the title, then open a joint account. The objective is to use your bank account to establish a history with the bank. Note: you cannot open a Canadian bank account from afar. You have to be present at a branch of the bank somewhere in Canada.
TD Canada Trust, RBC, and CIBC all have branches in Whistler Village. Scotiabank has a branch at Whistler Creekside. Appointments can be made online in advance of your arrival. Leaving this to the last day and showing up at the bank, hoping to see someone in the new accounts department, just doesn’t work…the bank will not do you any favors.
There is an advantage of having a Canadian bank account and the mortgage broker securing financing through the bank. When the bank has no relationship with you they may require you to come back to Canada to sign the mortgage documents at the time of completion.
Lawyer
When you are in BC or in Whistler, your realtor, Marion Anderson will arrange for you to meet with a Whistler lawyer. On the advice of your realtor, choose the lawyer you are planning to retain for your conveyancing. The meeting allows the lawyer to 1) photocopy and retain a copy of your passport, and 2) verify that you are who you say you are by matching your lovely face to the image on your passport.
The lawyer may need to verify that you are who you say you are so that when you transfer the settlement funds into the lawyer’s trust account there is no hold-up for your lawyer to release them. FINTRAC does not like millions of dollars being transferred into a lawyer’s account and the lawyer has never met/verified them to FINTRAC’s high standards.
Accountant
If you are considering any property that will generate revenue, then it would be prudent to connect with a Whistler accountant. Accountants are notoriously swamped from February through to July, and they can be difficult to meet with. However, you will need the advice of an accountant to understand the tax implications of the purchase you are considering. Marion will arrange this meeting for you. Read the page on Non-Residents: Taxes for a great overview.
Mortgage Broker
Start the financing application early in the buying process. It takes time to complete and supply the documents to the Mortgage Broker. In addition, a Whistler Mortgage Broker has fielded all the questions about Whistler zoning, rental restrictions, and GST issues so this broker is well-versed in helping the banker from Toronto understand your application. Marion will connect you with a suitable mortgage broker.
Financing
Downpayment on a Mortgage
On a property with a maximum value of $1,250,000 CAD non-residents who are citizens of The United States are typically required to provide a 20% downpayment. Non-residents from other countries are typically required to pay 35% for a downpayment. There is a sliding scale for properties over $1,250,000, which is the price of a one-bedroom Whistler condo. This means the higher the cost of the house, the higher the down payment from all non-residents regardless of country.
The mortgage broker can confirm this with you as the assets you hold can have a bearing on the deposit.
Mortgage Documents
You have an accepted offer with the condition of financing. By now (hopefully) you have been in contact with a mortgage broker and they have started to compile the documents for your mortgage application. When you have an accepted offer you should have 10 business days for the due diligence period. This gives you and your mortgage broker time to focus on your finance subject condition. This is the time to contact the mortgage broker who will send your application to a Whistler bank (let’s just use a bank in this example). The bank is the first-level financing option.
The bank approves your financing. In order for you to remove the subject condition of financing, you will be sent a Letter of Approval, also known as the Letter of Commitment. The Letter of Approval is a commitment that the lender will give you the financing. Note: This Letter of Approval comes with conditions that must be met. An example of the condition might be a bank appraisal of the property or a document that is still required from your employer, etc.
For non-residents, the Letter of Approval might stipulate that the non-resident Buyer must be in Canada to sign the mortgage documents at a Canadian Branch. There are two other options for signing. 1) the lender will rely on you having met a BC lawyer, and that lawyer is now able to verify your face and name against your passport. 2) the lender may request that the Buyer has a notary in the country they are currently in to witness the signing of the mortgage documents.
Refinancing
When a non-resident decides to buy a property it is important to make the decision about financing at the time. If a Buyer says that it would be simpler to pay cash and then refinance, that is not an option with Canadian Banks. To do so would be in contravention of FINTRAC. Best read my blog post on this topic of Non-residents and re-financing.
Funds
Third-Party Involvement
If you have a family member who is going to fund, let’s say the deposit or a major portion of your funds for the sale. Ask that generous person to transfer the funds to your home country’s bank account. This means that the funds will come from the Buyer’s account and not a third party.
If you are the president or director of your company and you are buying the property in your own name, but decide to send the deposit from your company account, this triggers a third-party involvement. Corporate documentation will be requested by your realtor so that FINTRAC has proof that you are a director in that company.
The Federal Government is suspicious of third-party involvement and this can have an effect on the funds being accepted/released by the bank. It also starts the light to be shone on that third party and where their money came from. However, from the realtor’s position, it just means that more documentation on the corporation or third party has to be collected and submitted to the Federal Government under the FINTRAC process,.
Please note, that if you are also getting financing, the Buyer’s lawyer automatically represents the lender in your transaction. Therefore if the third-party money is a loan, and you happen to mention this to your lawyer, your (Buyer’s) lawyer is duty-bound to report this to the lender.
Deposit Transfer
Once you have found the right property and you have removed the subject conditions on your accepted offer, the deposit will be due. The deposit is due either upon acceptance of the offer if there are no subject conditions. If there are subject conditions then it is usually 2-3 business days after subject removal. The deposit can be 5% to 10% and if you are buying a $2,000,000 property that is at least $100,000 as a deposit.
The Buyer’s deposit is held in trust by the brokerage of the Buyer’s realtor. For example, the deposit amount should be wired from your home country account directly into the Sutton Group-West Coast Realty’s bank account held In Trust. Marion will provide you with the deposit details. It is important to send this money as per the dates on the Contract of Purchase and Sale.
If you have enough money in your Canadian Bank account, it is important to know if your Canadian Bank will permit you to transfer a large sum of money from your Canadian Bank Account into the Sutton Brokerage’s Trust Account, and how long will that take. Will the bank permit you to transfer this amount online? All banks in Canada have the same transfer of funds restrictions. With the Toronto Dominion TD Bank, there seems to be a transfer limit of $10,000 transfer/week with a limit of $50,000 for the month. If not exactly those numbers, then something similar.
The Canadian banks will not accept a phone call or an email from you begging them to transfer funds from your Canadian account over to the Sutton Group account…please don’t think this is an option. Bankers who do bend the rules for clients or realtors whom they have known for decades will lose their jobs if they break the rules. No favours.
The deposit is part of the accepted Contract of Purchase and Sale. Should your deposit not arrive on time, the Seller can void the sale and keep your deposit. Best to read my blog entitled: Deposits Are Serious Business for more details. In addition, if the deposit is not made in time, then you are in breach of contract. Completion Date Consequences is another good blog to inform you on the seriousness of this topic.
Funds in Advance of Completion
Funds have to be in Canada in advance of completion. There is a bank in Whistler that requires the funds to be in 15 days in advance, another bank requires a minimum of 30 days in advance of completion, and a credit union requires 90 days in advance of completion. This is the reason you open up the Whistler bank account as soon as you know you want to buy real estate because you cannot open up an account from afar. Remember, in this scenario, the bank is financing your property and wants to see that you can have the funds to transfer. For example, you may have opened a Toronto Dominion TD Bank account but your property purchase is financed through a mortgage from Scotiabank. Unfortunately, these two banks will not be communicating to each other about your property purchase. They don’t care.
If for example, the TD is financing the mortgage, they may stipulate that you have to come back to Canada to sign the mortgage release documents 2 days before the completion date. They may also insist that you have your balance of funds held in your TD account for 30 days prior to the completion date. If you have to come back to Canada, then you can go to your bank and get a bank draft and take it over to your Whistler lawyer’s office.
Moving Money
Where problems arise is when you send money into your Whistler bank account and then email or call the bank and ask them to transfer over the funds to your Whistler lawyer’s account. The bank will receive money but for compliance purposes, they cannot move money out of one account over to another bank account. For example, You transfer $1M from your US account to your Whistler TD account. The TD Bank will not transfer the $1M to the Scotia Bank where your lawyer has their trust account.
Race and Company, an established legal firm in Whistler has a Trust Account in the TD. Teh TD and Race and Company are in the same building. Someone from the legal firm is probably in the TD every other day. However, the TD will not transfer settlement funds from your TD account into the Race and Co., Trust Account. The TD will not communicate anything about you or your account with Race and Co.
Note: the Buyer’s realtor cannot help you move money around. You can send your lawyer a cheque so they can withdraw the money, but at this stage, you will not know the actual amount because the Statement of Adjustments will not yet have been signed by the Seller. It is best to send the balance of the funds directly to your lawyer’s account.
In addition, a cheque that has not been certified will not clear within 5-10 business days. I would also caution you that even a certified cheque or bank draft will be held to be cleared if the cheque or bank draft amount is substantial. Even a cheque for $100 from a relative in the UK takes 10 business days to clear. We all know that this is how the banks make money, and it is unlikely to change.
A certified cheque for $100,000 to a receiving bank is a piece of paper that could have been forged. Understandable. Their branch manager is not going to put a career in jeopardy because of your situation…they will hold any form of payment slip until they are sure. This is hopeless because the deposit has to be turned around in 2 days. Can you imagine how the banks respond to a $4M certified cheque?
Lawyer’s Trust Account.
It seems that the best way to transfer funds is directly to your Whistler lawyer’s trust account. Best to verify with your lawyer but the funds must arrive a couple of days in advance of the closing which is cutting it close. Your lawyer will direct you on this. This will only work if your lawyer has met you in person, and has taken a photocopy of your passport. In other words, the lawyer has verified you. The lawyer must have done this for all parties that will be on title.
When your funds for the sale have been received in your lawyer’s account, that money is held In Trust. The lawyer will contact the mortgage broker to tell the broker that the money you said you were sending has now arrived in the Lawyer’s Trust Account. This communication satisfies the Letter of Approval condition that the buyer has their own funds. The lender will not release the funds to the Buyer’s lawyer until they know that your funds are in place in the trust account of the Buyer’s lawyer.
Sometimes, the bank providing financing will not send the mortgage funds to the buyer’s lawyer until the actual completion day. Yikes!
Completion Date
Two days prior to the completion date, your lawyer contacts the mortgage company. The mortgage company will release the funds into your lawyer’s trust account in time for the completion date. However, at that stage this is the lawyer’s problem, not the realtors.
Next Steps
The steps above are a guideline as to what you can expect. With an experienced Whistler realtor and a local accountant and lawyer on your team, this will not be a difficult process. If you are a non-resident who is considering buying or selling a property in Whistler, contact Marion Anderson, author of this site. If you have read the non-resident pages, you already know what kind of realtor, and person Marion Anderson is.
If you think I would be a good fit to work with you and your family, and you are not already working with a Whistler realtor, please contact me. I look forward to hearing from you.
It’s a Good Life in Whistler!
Marion
Marion Anderson Personal Real Estate Corporation
marion@WhistlerSkiinSkiout.com (604) 938-3885