Buying a home abroad: What you need to know

16 January 2023 by National Bank
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Buying a home abroad is a dream for many. Whether you’re thinking of a home by the beach or in the heart of a bustling city, here’s what you need to know before you start planning.

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What do you need to consider before buying a home abroad?

Before buying a home abroad, take the time to identify your needs and wants. This is a big decision and will require a good deal of reflection.

Consider making a list to organize your thoughts. Write down your needs (essential features of the property) and wants (features that would be nice to have, but are not essential).

Example: If you found a perfect place but it didn’t have the pool you wanted, what would you do?

Once you’ve figured out your criteria, you can start looking. You’ll likely want to research places you’ve previously visited and fallen in love with. Start by checking online and consulting specialized real estate publications.

While researching homes abroad, be sure to consider the following factors:

  • How to get there
  • Climate
  • Local culture
  • Cost of living
  • Safety
  • Services available nearby (hospitals, schools, etc.)
  • The economic and political situation
  • Access to consular services (embassy, etc.)
  • Language

Avoid impulse purchases

It can be a good idea to try renting a property in the country you’re thinking of buying a home in. Living there for a short time could help you figure out how you feel about the place. But remember that a single week’s vacation somewhere might not be enough for you to make an informed decision.

Assess your expenses

Drawing up a budget is an essential step when preparing to buy a home abroad.

Think about how much you can afford to spend on a property and be sure to consider the added costs associated with buying a home. You should also consider your day-to-day expenses. The cost of living can vary greatly between countries. And don’t forget to account for the exchange rate and its possible fluctuations.

Some notable expenses to consider:

  • Food
  • Insurance
  • Medical care
  • Transportation and gas
  • Telecommunications (TV, phone, internet)
  • Utilities
  • Taxes

Learn about local laws

Take the time to learn about local laws before buying a home abroad.

Some countries or regions do not allow non-citizens to purchase property.

In other places, governments charge a tax for non-resident homeowners. If you’re planning to rent out your property when you’re away, check if doing so is legal and permitted in your area. Also check the rules of your homeowner’s association, if applicable.

Tax residency

If you want to buy a home abroad and live there for months at a time, pay close attention to tax residency rules. After a certain number of days in a given country, you may be required to file a tax return and pay taxes. You could also lose your health insurance coverage. For more information, consult a tax specialist.

What experts should you consult when buying a home abroad?

Although doing your research online is essential, you can also ask for help from experts in Canada and abroad.

You should build a team that includes:

  • Real estate brokers

These people know the market and can save you time by showing you many different properties in a short period. They can also help you understand if the price is fair and what the resale potential of the property is. You should be aware that many Canadian real estate brokers have international networks and may be able to refer you to colleagues abroad.

  • Legal professionals

When buying a home abroad, get support from a notary or a legal professional to make sure everything is in order. They can help you protect your investment and navigate the necessary legal and regulatory processes.

  • Your social circle

Ask around⁠—you may know people who are familiar with the place where you plan to buy property. Someone in your social circle may even have purchased a home abroad and be able to share invaluable advice and experiences. It’s time to tap into your network.

  • Local people

There’s nothing like hands-on experience. Take the opportunity to visit and absorb the local culture. Be sure to spend time talking to the locals and asking questions. They know the place best and could help you decide if it’s truly your dream destination.

How will you finance the purchase of a home abroad?

There are a number of options when it comes to financing the purchase of a home abroad. You should know that taking out a mortgage abroad can be difficult or even impossible for non-residents or non-citizens.

You can explore the following potential solutions:

  • Refinancing your property in Canada (at least to put together a down payment)
  • Buy in cash (if you have access to sufficient liquid assets)
  • Obtain a loan from a Canadian financial institution with branches abroad, like Natbank in Florida

Costs to be expected

In addition to the living expenses that are already accounted for in your budget, don’t forget to plan for the costs related to buying a home.

For example, you may need to cover:

  • Taxes
  • Mortgage payments
  • Your down payment
  • Condo fees
  • Insurance
  • Travel costs (flights, etc.)
  • Maintenance
  • Security
  • Alarm systems

Renting out your property to recover some of your expenses

Renting out your property could allow you to recover some of the expenses related to buying a home abroad. Some people who own a second home are even able to generate significant income from it.

A number of online platforms and agencies are available to help you rent out your home when you are away.

Be sure to check if you’re legally allowed to rent out your property and if your homeowners’ association rules allow it, if applicable. You should also be aware that the rental income will have an impact on your taxes and must be included in your tax return.

Buying a home abroad can be a real adventure. Regardless of where you plan to buy your dream home, you’ll need to take some precautions. Do your research and be sure to consult the right experts.

Do you want to talk about it? Contact your National Bank advisor or your National Bank Financial Wealth Advisor. Don't have a specialist responsible for your file?

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Image maison neuve

Getting ready to become a first-time homeowner

Ready to buy a home?
We’re here to help!