Northward bound

Hockey is the national sport, one- and two-dollar coins are called “loonies” and “toonies,” Thanksgiving is celebrated in early October and “south of the border” means the U.S. Welcome to Canada.

The northern nation is a popular destination for U.S. tourists, some of whom also discover it can be an attractive place to purchase property as a permanent residence, or for vacation or investment purposes.

Those who have moved from Southern California cite Canada’s comparatively affordable home prices, liberal politics, outdoor recreation, environmental leanings and less hectic lifestyle as things that attracted them.

And although the colder temperatures may give pause to some would-be residents, the highest hurdle to buying a home in Canada is generally the 25% to 40% down payment requirement imposed on nonresidents, a category that includes U.S. citizens who intend to relocate and Canadians who earn their income outside their own country. Beyond that, the home-buying process itself is similar in both countries.

Much like in the U.S., home values have been on the upswing in Canada because of attractive mortgage interest rates. The average price of resale housing in May was $217,090 in U.S. dollars at the current exchange rate, an increase of 8.2% on a national year-over-year basis, according to the Canadian Real Estate Assn. Vancouver’s May price average was $337,788; Toronto’s was $279,482; and Montreal’s, $196,304.

Southern California homes in the six-county area appreciated 15.2% for the same period, reported DataQuick Information Systems, for a median price of $456,000.

Clear-cut comparisons are difficult to draw, but the buying power of the U.S. dollar -- which was worth $1.24 Canadian on Friday -- helps U.S. buyers too. Mortgage interest is not tax-deductible in Canada, however, so the after-tax cost of borrowing is higher for most taxpayers if the other terms of their deals remain the same. Property tax is also not deductible.

Although folks started clamoring about moving to Canada when President Bush was reelected, a mass exodus has not ensued. Some are moving for personal or work reasons.

Laura and Nick Roveda purchased their new home on Salt Spring Island in the western Canadian province of British Columbia just over two years ago.

Their reasons for moving were simple: They wanted a quieter lifestyle for themselves and their 5-year-old son and they’d been priced out of buying a house in the Sunset Park neighborhood of Santa Monica, where they’d been paying a below-market monthly rent of $1,950 for a house for seven years, Laura Roveda said. “We had a great deal going in Santa Monica with some elderly landlords who didn’t raise the rent ever.”

They had considered moving to Vancouver, B.C.; Portland, Ore.; or Boulder, Colo., before they settled on Salt Spring Island. The recommendation of friends already living on the island was a factor in their decision, as were concerns about politics, safety and parenting in the U.S.

“The political climate was moving in a direction that we weren’t comfortable with. I had been mugged at gunpoint in Los Angeles and had had other experiences that made it feel unsafe,” Laura Roveda said. “Once you have kids, you think about that.”

The Rovedas’ 2,500-square-foot island house is on five acres of land adjacent to a 600-acre ecological preserve. It was built in 1994 and has four bedrooms and 2 1/2 bathrooms.

The house came on the market a month after the Rovedas first visited the island to search for a home. They placed an offer to buy the new listing sight unseen at the urging of their real estate agent, subject to a few conditions, including the opportunity to view and approve the property before the sale closed. Nick Roveda, a freelance film editor, returned to the island and brought back a video of the house for his wife, a licensed social worker. The couple decided to go ahead with the transaction.

“It made no rational sense: What were we doing buying a house in another country? It was all crazy,” Laura Roveda recalled. “But we listened to our gut the whole time.”

They offered and paid what was about $250,000 U.S. at that time, said Roveda, who estimated the property would be worth $340,000 today. The couple obtained a mortgage from international lender HSBC with the help of a down payment gift from their parents. The house was rented to a Canadian family until April 2004, when the Rovedas, who now also own and operate a metaphysical boutique in nearby Ganges, moved in.

Jay Nadeau, a native of Hawaii, had lived in Southern California for nine years before she relocated to her new home on Nun’s Island in Canada’s Quebec province in March 2004 to take a job as an assistant professor of bioengineering at McGill University in Montreal.

Nadeau paid about $250,000 for her 1,500-square-foot town home, which has three bedrooms and two bathrooms. The attached unit is on the ground floor, so Nadeau also has her own garden.

She found the house in one week of visiting neighborhoods alone on foot and by bus and then touring for-sale homes with a local real estate agent. The deal involved quite a bit of haggling, but the sellers ultimately agreed to accept a sizable premium over their asking price in exchange for closing the transaction and vacating the property three months sooner than planned.

Nadeau also agreed to obtain inspections and a mortgage approval within 48 hours -- not an easy task since she was out of the country at the time. The mortgage proved more difficult than the inspections. The first bank she contacted lost interest when the loan representative realized Nadeau had no established credit history in Canada.

She then contacted Alisa Dickinson, a Vernon, B.C.-based mortgage specialist with Home Loans Canada, a subsidiary of CIBC Mortgages Inc., a bank with offices in Canada, the U.S. and other countries.

Dickinson came to Nadeau’s rescue with a willing lender, provided that Nadeau would make a 25% down payment and that her then-partner, with whom she still co-owns a house in Pasadena, would co-own the new house in Montreal as well. His income in the U.S. sealed the deal on the Canadian mortgage.

Nadeau said she saved thousands of dollars by monitoring the currency exchange rate and using an international bank, HSBC, to convert her down payment into Canadian dollars. Dickinson concurred that such a strategy can work in the buyer’s favor, although she said a Canadian bank or lender also can convert deposited funds.

“If the U.S. citizen is savvy with finances, they probably get a better [exchange] rate in the U.S.,” she said, and can have the institution wire the funds.

The use of a lawyer-notary, called a notarie, is customary to draw up loan and real estate transaction documents in Quebec. Lawyers are used to close deals in other provinces.

The documents in Nadeau’s transaction, except for instructions from the French-speaking sellers, were translated into English. Nadeau, who is bilingual, said her realty agent would have translated the documents for her if that had been necessary.

Buyers who purchase a home in Canada, regardless of whether they are Canadian or U.S. residents, typically owe a land or property transfer tax that’s payable to the local provincial government. Quebec’s euphemistically named “welcome tax” added about $2,200 to Nadeau’s home purchase.

Neither Roveda nor Nadeau said they regret the decision to relocate to Canada, yet both expressed a sense of the losses the choice necessarily entailed.

Roveda, who has returned to the U.S. perhaps half a dozen times for business and personal reasons, characterized her first winter in British Columbia as “a little rough.” It was a lot colder than what she was used to as a Southern California native. Nadeau, who has visited L.A. only once since she relocated, said the decision to leave her Pasadena home and her longtime relationship was “very difficult.”

Still, her experience in Quebec has been “almost entirely positive.” She’s applied for permanent residency.

*

(BEGIN TEXT OF INFOBOX)

Guidelines for buying up north

U.S. citizens and residents can obtain mortgages to purchase property in Canada, according to Alisa Dickinson, a mortgage specialist with Home Loans Canada, a subsidiary of CIBC Mortgages Inc. The requirements vary somewhat depending on a borrower’s situation. With that in mind, here are some general guidelines:

* Borrowers must make a full disclosure of their income and debt, and the lender will require verification of income through tax returns, job offer letters from employers, paycheck stubs or other documents.

* Job stability, ideally with the same employer or at least in the same field in the U.S. and Canada, is a must. Borrowers who plan to start a new career or business after they move may be unable to obtain a mortgage until they can demonstrate a steady source of income. Borrowers who are retired will need to produce evidence of their net worth and monthly income.

* A 90-day history of the source of the borrower’s down payment will be required to comply with anti-terrorism and anti-money laundering regulations.

* Fees for appraisals, inspections and various closing services differ from region to region in the country.

* Most mortgages are amortized over a maximum of 25 years and few have fixed rates for that period.

*

(BEGIN TEXT OF INFOBOX)

Considering Canada?

A Canadian government website has work and immigration information at www.cic.gc.ca/english/index.html. The Newcomer’s Introduction to Canada offers valuable details at www.cic.gc.ca/english/newcomer/guide/index.html.

Other useful sites include:

* www.careers.ualberta.ca/Living/index.aspxPage27

* www.icomm.ca/emily/how.html* www.cra-arc.gc.ca/tax/individuals/topics/gst-hst-rebate/menu-e.html* www.okanaganhomes.com/financing/main.htm* www.hsbc.com* home.hlcmortgages.com