If you’re a Canadian buying a 2nd home in the U.S. there’s a chance you’ll need a U.S. mortgage. If so, you’ll be paying that mortgage in American dollars.
That’s fine…unless the Canadian dollar takes a nose dive, like its been doing lately.
Last week the Canadian dollar plunged 4% versus the U.S. dollar. It was the biggest weekly drop since 1971 according to foreign exchange provider, HiFX. That means a $250,000 house in the U.S. just got $10,000 more expensive for Canadians.
If you have a U.S. mortgage, exchange rates also come into play when you make your monthly payments. One way to avoid this risk is to refinance your Canadian home and use that money for your purchase. That way you can buy in the States and have your debt in Canadian dollars.