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How to prepare your finances for coming to Canada


How and why you’re moving to Canada

Your financial needs, priorities and choices in Canada will be determined, first and foremost, by the reason you’re moving here. Are you moving here to study or to work?

  • International students: If you’re arriving as a student, you can open a savings account at a Canadian bank and, if you are of legal age—18 or 19, depending on the province or territory—get a credit card and start building your credit history. A healthy credit score is helpful if you want to borrow money in the future, such as a car loan or a mortgage. Potential employers and landlords may also consider your credit score. If you want to earn money, learn about working as an international student.
  • Workers: If you’re moving to Canada on a work visa or as a permanent resident through one of Canada’s federal or provincial immigration programs, your financial priorities—apart from opening a bank account and building a credit history—will be different from students, obviously. You may be looking to invest some of the money you’ve brought with you. For relatively safe and conservative investments, you could open a high-interest savings account (HISA) or buy guaranteed investment certificates (GICs)—these typically pay higher interest rates than a typical bank account. And as you start working and saving up money, you can explore other types of investments, such as mutual funds or ETFs, perhaps with the help of a financial advisor.

Buying your dream home in Canada

If you decide to stay in Canada, you may eventually want to buy a home and settle down. There are different types of homes, and you can choose one depending on the size of your family and your budget. Home prices vary widely by location and type of property—you can expect to pay more in major cities and popular neighbourhoods.

  • Detached or single houses: These are single houses on separate plots of land. They are typically the most expensive type of home in Canada.
  • Semi-detached houses: These houses share one common wall but are on separate plots of land.
  • Townhouses or row houses: These homes are attached in a row. You might share one or two walls with your neighbours.
  • Condominiums (condos): A condo is a unit in a building (also referred to as a condo itself). You own your unit, and you have an interest in the building’s common (shared) elements. Each building has a condo corporation, which has a board of directors. Unit owners can attend the corporation’s annual general meeting and vote on different matters, such as changes to condo by-laws and rules.

Real estate professionals you should know about

To protect home buyers, the entire process—from searching for a home to getting a mortgage and closing the deal—is regulated and handled by licensed professionals who have completed real estate training and passed examinations. Here are three of the professionals you’ll need to work with:

  • Real estate agents, or realtors, don’t just show and sell properties. A good agent finds homes that fit your needs and budget, steers you away from undesirable or risky properties, and helps negotiate your eventual purchase. Agents offer helpful information on the availability and quality of essential services—such as hospitals and schools—and amenities like community centres and supermarkets.
  • Mortgage agents and mortgage brokers are licensed to sell mortgages—the loan you get from a bank or other lender to buy a home. Their job is to find a suitable mortgage at as low an interest rate as possible, based on your income, assets, credit score and overall financial health. In return, they receive a commission paid by the lender. Mortgages are also available directly from lenders such as banks (but they only offer their own products).
  • Real estate lawyers or notaries typically get involved once you’ve found a home you want to buy. They specialize in the legalities of the purchase process and the contracts involved. Buying a home is an important decision and possibly the biggest purchase you’ll ever make. A good real estate lawyer will provide advice that’s in your best interest and assist in closing the purchase.

Various costs of buying a home in Canada

Apart from the cost of the property itself, a home buyer incurs several other costs. Here are the significant expenses to be aware of:

  • Down payment: If you’re getting a mortgage from a bank, the down payment is the portion of the money you contribute upfront—typically 5% to 20% of the home’s purchase price. For example, for a home worth $500,000, a 20% down payment would be $100,000. But there’s no upper limit to your down payment, so you could even put down 50% or more, if you have the funds. The higher the down payment, the smaller the mortgage, and the less interest you’ll have to pay over time.
  • Land transfer tax: When you buy a home, you have to pay a tax to register the property under your name. Also known as a “deed registration fee” or a “property transfer tax,” this amount is calculated as a percentage of the home’s purchase price. For example, if the home you’re buying costs $500,000 and the land transfer tax is 1.5%, then the tax you pay is $7,500. The amount depends on the city and province or territory where the home is located. In Toronto, for example, buyers pay double—a municipal tax and a provincial land transfer tax.
  • Home insurance: Home insurance covers the costs of replacing your property and its contents after fire, theft, damage or loss. You can also buy additional insurance for risks such as flooding and water damage, or to replace valuable items not included in a typical home insurance policy. (You will also need a separate insurance policy for vehicles.) If you have a mortgage on your property, your lender will require home insurance.
  • Mortgage insurance: There are two types of mortgage insurance. Mortgage life insurance protects the policy holder’s beneficiaries if the borrower passes away before the mortgage is completely paid. While death is difficult to think about, it’s essential to consider the consequences for your family—such as losing the home if they can’t keep up the mortgage payments. The second type is mortgage loan insurance (also called “mortgage default insurance”), which protects the lender if you default on your loan. This type of insurance is mandatory if your down payment is less than 20% of the home’s value. The premium is 0.6% to 4%, depending on the loan-to-value ratio of your mortgage (the mortgage loan amount divided by the home’s purchase price). Although the lender pays the premium, the premium cost is passed on to the borrower—it’s typically added to the mortgage.
  • Closing costs: Closing costs—such as title insurance, appraisal fees, home inspection costs, legal fees, land transfer tax and the reimbursement of property taxes prepaid by the previous owner—can be significant, usually estimated at 1.5% to 4% of the home’s purchase price. The legal costs alone are typically $400 to $2,500. These costs vary widely depending on the lawyer you hire.
  • Other costs: New home owners should anticipate numerous additional costs. Some of these are predictable and recurring, including property taxes, maintenance costs and condo fees (if applicable). Maintenance costs are what you spend to maintain or upgrade your home. Condo fees (also called “maintenance fees”) are mandatory monthly payments that go toward building upkeep, services, utilities and repairs. You may also receive separate utility bills for electricity and water.

More about buying a home in Canada

Learn more about buying real estate, including down payments and mortgages, government programs, and the cities and towns that offer the greatest value.

When buying a home in Canada, accurate information and prudent financial decisions can save you thousands of dollars in taxes, insurance premiums and other home-related costs. This leaves you with more of your hard-earned money to enjoy and explore this beautiful country. 

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