International Mortgage for Buying a Home in Anguilla

by Richard
(Ontario, Canada)

My wife and I came across a villa you have listed on your site for sale - beautiful home!

We are Canadian and are considering selling our current home here and becoming non-residents. We would need a mortgage once in Anguilla. So we were wondering if you had any information on acquiring an international mortgage as non-residents of Canada?

Having to transfer my business to Anguilla (online business), sell our home in Canada, and eliminate any Canadian ties to establish non-residency, I assume that obtaining a mortgage from a Canadian bank for property in Anguilla would not work.

If you have any information or suggestions on the process of acquiring an international mortgage, that would be much appreciated.

Reply from Ken (AKA "Nori's Dad")

Richard, it sounds like you've been reading carefully and doing your homework. And thanks very much for the kind words about the villa that we are offering.

It was a labor of love to keep a crew (who we like and respect) working, not a money-making operation. The outcome is wonderful. We'd happily live there if someone popped by our current home, wanting to buy it instead! Anyway...

I'll back this topic up a bit and cover how to secure a mortgage in Anguilla in a more complete manner.

Basics of Non-Residency

First, for those who are new to the concept of "leaving home"...

To be considered a non-resident, you must cut all ties with your home country. Since the time that we left Canada, I have found that there are two types of non-residents...

1) those simply leaving, as we did

2) those who want to structure their affairs to reduce taxes, seeming to leave, but still spending a great deal of time in Canada (or whatever the home country may be, but we'll use Canada as the example here).

The latter often trip up, sooner or later, unless they really dot all the i's, not to mention cross all their t's. They must also be careful not to get too comfortable with this gray-zone and make mistakes after they "leave."

Or, one day, you get a notice that the tax authorities would like to review your "non-residency." It would be a lot worse if that notice came to your Canadian post office box!

Another common misconception...

Some people who I've met seem to think that if they simply do NOT live in their home country for more than half of a year, that will suffice. So, for example, if they live, say, 3 months in each of 4 countries then "no country owns me."

Wrong.

If you do not establish residency on the basis of living in one country for more than 6 months each year, you "belong" to the country of your citizenship.

But I digress. TRULY leaving one's home country is much simpler if you are actually, simply leaving. You do all the normal things that one does... change credit cards and driver's license, close bank accounts, terminate memberships, etc.

In short, you are moving.

Gray Zones (You Don't Get to Make the Rules)

Still, it's possible to overlook something silly even if your move is sincere. And governments hate to lose cash cows like you (i.e., your tax payments). To be fair to them, it can be difficult to differentiate genuine from fraudulent.

So here is the core problem, even assuming that you are living for more than 6 months in one location...

There is no black-and-white interpretation of what constitutes "non-residency." When you get down to the regulations, it is more of a sliding scale of grays.

Get Legal Advice

To make the break as clean and complete as possible, I suggest legal advice. I'd be glad to recommend you (or anyone reading this) to the Canadian attorney who helped me arrange our affairs.

Please note... none of this is legal advice, merely what I have learned. Use at your own risk.

A personal friend of 30 years, this attorney will help you handle matters such as deemed disposition, as well as handle potential problem areas (such as retaining investment land that we retain in Nova Scotia).

Use the form for questions on the "Contact" page. That goes to Nori, so please tell her about this web page. She'll forward your e-mail to me.

OK, to your specific question (finally!) about international mortgages...

Why Overseas Mortgages?

First, let's lay out the basic problem. It will be hard to secure a mortgage from a Canadian bank on the villa that you purchase here. The reason for that?

You have sold everything in Canada! You have certainly sold your primary home, and should probably sell your summer cottage (again, legal advice will help with sticky issues like that).

Or perhaps you are renting them. Like I said, it's about "grays." If you rent out your primary home, that is a significant potential problem, because the government could claim that you plan to come back.

Let's say you sell your primary home, but rent out the summer cottage. Suppose circumstances change and you decide to return to Canada 5 years later. You decide to live in the summer cottage.

That may then become a problem. The government could claim that you never really planned on leaving permanently and reassess your tax situation retroactively, all 5 years!

Remember, you do not make the rules. They do. So the last thing you want is legal problems down the road.

You can, though, own raw land as an investment with no worries. So, if you have passive investment assets in Canada that are worth as much as your purchase here, you could take out a regular loan at a Canadian bank, using that as collateral.

Otherwise, you have a problem. Mortgages are normally secured, of course, by the property being purchased. But if you have disposed of all assets, there is no collateral for the banks to attach to the loan for your purchase in Anguilla.

You have probably discovered by now that Canadian banks don't want the bother of assessing the value of a foreign purchase, nor the logistical headaches of foreclosing, should the worst case happen.

Assuming you cannot pay 100% cash when building or buying a villa, in Anguilla, that leaves you with the following...

Three Financing Option When Buying A Villa

Here are your choices...

1) Local Anguillian Banks

Since the real estate market is currently depressed (an excellent time to be a buyer, incidentally), banks here are leery about lending money.

If you do explore this route, go with either Scotia Bank or First Caribbean in Anguilla. Both are Canadian subsidiaries and are well run (Canada has developed a reputation for solid banking practices).

If you have done your Canadian banking with either ScotiaBank or the Canadian Imperial Bank of Commerce (CIBC), ask for a reference. It won't work magic, but it's much better than cold-calling.

In any event, the two indigenous banks, National Bank of Anguilla and Caribbean Commercial Bank, are in shaky shape and are under the trusteeship of the Eastern Caribbean Central Bank.

If you do explore Anguillian banks, interest rates are very high here, on the order of 7-9% if memory serves. Personally, though, I would suggest that you do the following...


2) Owner Financing

Just prior to the collapse of the U.S. stock market in 2008, the villa that we are selling (if it existed then), would have sold for $1.5M, cash, and quickly.

And fantasies of where Anguilla real estate was heading were truly insane. Property was hot - a classic bubble.

Today?

Real estate is at a low. Although there are signs of it picking up, it is a buyer's market.

So why not ask the seller if they'd take back part of the purchase price back as a mortgage? I've not thought of this until now and, oddly, no one has asked. But we probably would.

From my point of view, I'd rather have the entire amount working for me through investing, of course. But I'd also rather half of it working for me and half of it generating regular mortgage payments for 10 years (or whatever the term is).

In short, it's a buyer's market. So ask. You have nothing to lose.

And finally, Richard, we arrive at your question (although I hope the background information was useful)...

3) International Mortgages

All I can say is... be careful. Deal with large reputable banks who do this sort of thing. Avoid the brokers and small operations who turn up when you Google this topic.

Since Anguilla is a British Overseas Territory, I'd suggest that you start with large British banks...

For example, call Barclay's and see if they deal with Anguilla properties.

As you wade through Web articles on "overseas mortgages" or "international mortgages," please do be careful. Even the most sincere-looking piece can be an entry into a world of headaches.

Just because I am aware of the scams, though, does not mean that there are no legitimate operations with reasonable fees who can get the job done smoothly for you.

Hopefully, someone who lives here has used this model to purchase land here. If so, I ask a favor of that person...

Please post your experience in the Comments area below, including your contact email address. I will not publish your name or address (all comments are reviewed before being published), but do need to verify the information with you before publishing.

There is nothing like the experience of a happy customer who has "been there, done that." So please add yours.

Sorry Richard, for not adding more to this. I hope it has provided some guidance. The bottom line is explore every other possible avenue first.

If all else fails, proceed with caution. Try to deal directly with a known, reputable bank (probably British) that includes overseas mortgages in their list of services.