Canadian Buyers Can Get a Loan to Finance Their Vacation Home or Condo
Canadian real estate buyers on Maui typically love the time spent tramping through the rain forest, exploring sandy beaches and gaping at waterfalls in their quest to find a dream home on Maui. Certainly, Canadian buyers love the moment when they walk onto a deck with blue-topaz water shimmering in the distance and know this property is the one. Best moment of all comes, of course, when they sign the papers and get handed the keys.
A Canadian buyer of real estate in Hawaii will always remember the happy moment when they buy property in Hawaii. Unfortunately, this is not the entire process. Frankly, the road to the closing table covers many steps and these moments sometimes can be frustrating. One step in particular often causes anxiety for Canadian buyers of real estate in Hawaii: Getting a loan in a foreign country.
Many Canadian buyers of Maui real estate don’t believe it’s possible to get financing from an American bank. Let me assure you, they can. American banks give loans to Canadian buyers of Maui property all the time.
According to a recent article in the Globe & Mail, Canadian borrowers have several financing options. One option involves drawing out equity from their homes in Canada by obtaining a home equity line of credit (HELOC). Another is using a U.S. lender affiliated with a Canadian bank that can verify the buyer’s credit in Canada. If you want to deal with a Canadian lender, you should explore these options.
I want to talk, however, about what I see more often: When a Canadian buyer seeks conventional financing from a U.S. bank in Hawaii. First, the good news. In the U.S., Canadian buyers can choose between 15-or-30-year fixed mortgages, long-term adjustable rate mortgages (ARMs) or hybrid ARMS, which have fixed rates for shorter terms. Mortgage rates for all of these loan types remain very low.
I won’t ever give advice on what kind of loan to get. That you should discuss with a mortgage broker, a lender and your financial advisors. However, I strongly agree with most Realtors on the island that borrowers do best by using a local lender in Hawaii. Local lenders understand the Maui market, properties and neighborhoods. They are more responsive and knowledgeable about the permitting issues, appraisals and taxes. Overall, the underwriting process just tends to go more smoothly when a local lender is handling it.
There are two other pieces of advice I’d like to give to give Canadians buying real estate in Hawaii when seeking financing for their home on Maui. It’s about attitude, two essential ‘Ps’:
Preparation: You should have your financial information at your fingertips when you sit down with a loan officer. Canadian borrowers usually need to show at least two years of financial statements to prove assets, liabilities and credit history. These documents are likely to include two forms of ID, T-4s, tax returns, and mortgage statements, among other documents.
Patience: Canadians have to jump through more hoops than an American borrower. So, patience is needed. As a Canadian, you’ll sometimes have to pay a larger down payment too, as much as 20-to-30 percent for a house and 35 percent for a vacation-rental condo. Expect also to pay a little higher interest rate on your mortgage, anywhere from 0.5 percent to 1.5 percent more.
Personally, I found another “P” works nicely too: A paddleboard. Seriously, go rent one. When the process of buying a house in the islands gets you down, just think of where you are. You are on Maui, my friend, and one step closer to owning a piece of paradise.
Please contact me at 808 344 7855 or email me at MarkMorrisOnMaui@gmail.com if you would like to discuss real estate on Maui or the other Hawaiian islands.
Thank you,
Mark Morris R(S)
Coldwell Banker Island Properties (Paia)
20.917500
-156.325833