You should always consult a mortgage professional to get access to accurate and current information
You have always wanted to own an acreage, live outside of the city and have a quiet place of your own. It is a great life for sure.
When you decide to go down that country road, before you fall in love with that little farm, It is a good idea to talk with your Realtor, broker or banker, ensuring you know the differences in purchasing and what your financing options are.
If moving to an acreage or farm, you need to consider how much land you are looking for and how much down payment will be required. The rules for lenders and mortgage insurers are different when buying rural property.
With mortgage insurance (CMHC) you are required to have at least 5% of your primary residence costs for down payment. But what does that mean with a rural property or acreage?
https://www.cmhc-schl.gc.ca/consumers/home-buying
If you have less than 20% down and need mortgage insurance, it can get complicated.
Mortgage insurance typically will only insure a property under 10-15 acres. This includes the land, home and garage.
Shops, Barns, and other outbuildings cannot be insured through mortgage insurance.
So, if they have a large value, you will need a larger down payment
The property will have to be accessible all year round
The home will be required to be on the grid
There must be access to potable water
It is intended for residential use only
You should always consult a mortgage professional to get access to accurate and current information
Buying raw land or a large parcel of land with a home on it has its own set of rules.
Raw Land typically will require 35-50% down, depending on your lender.
Often, traditional lenders will shy away from these mortgages, and you may need to go through a broker
Often, these loans have higher interest rates, and the residential mortgages
Don’t forget about GST, raw land will likely be taxable.
You may require two separate loans, one for the home (Residential) and one for the rest of the land (agricultural). Always talk to a lender or broker first.
Understanding your financing options and limits is always a critical part of buying any property, even more so when looking at rural properties.
If you need assistance in finding a great mortgage broker or just want to have a conversation about purchasing a rural property, give me a call (403) 585-6552 or send me a note.
Having the right people in your corner can make the process a lot simpler.
Rory Hale - REALTOR®
CIR Realty
403-585-6552
RHale@CIRRealty.ca
www.roryhale.com
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