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30 Sep

Can a Canadian get a mortgage in Canada for a US property?


Posted by: Jill Couture

I have heard this question many times now and the answer is mixed.  While the initial answer is no you can’t receive a mortgage in Canada that is secured to a property across the border.  You can borrow money from your properties in Canada to purhase a property in the states outright.  

If you are one of the lucky ones that has equity in your home you can access that equity to purchase your property in the states for cash.  This is a great option especially if you are going to rent out the US property when you are not enjoying it yourself.  When you access equity in your home to purchase an investment that you expect to bring in revenue the interest you pay on the money borrowed becomes 100% tax deductible (as does all the upkeep to the property over the year)  Today the rate to borrow are also at historical lows so marry that with the all time low property value in the US and you have a match made in vacation home heaven!  We are lending interest only mortgages forthe purpose of investing at Prime + .25%, aka 3.25% fully open terms. 

I have a few clients who are currently purchasing properties in the US and what they are doing is refinancing their existing mortgage into a Home Equity Line of Credit (HELOC).  We are separating the exisiting mortgage on their home into one segment and then adding another segment which they will use for investing in property down south.  By segmenting the borrowed funds you are making your accounting at year end a lot easier and you have the option of making your payment on your new property 100% tax deductible (if it will be generating revenue). 

Contact me for more information if you are interested in purchasing a property down south.  In most cases as a Canadian obtaining a mortgage in Canada you will be streamlining the process and getting a lower cost of borrowing and it will be a quicker and easier process (granted you have equity in your home/properties).  Of course this process works for investing within Canada as well.

Jill Couture