Rural Property Financing Grande Prairie
The rules regarding mortgages for acreage, defined as lots over five acres, vary somewhat from the conventional home mortgage. The standard rules for determining someone’s credit worthiness, their down payment and the marketability of the home are similar. That is separate from the fact that many Grande Prairie mortgage lenders won’t want to deal with rural properties because of the limited demand for them and marketability. You can work with a Grande Prairie mortgage broker to find the few lenders who work in this market. However, there are a number of issues that can arise when trying to finance rural property. This is where your Trusted Grande Prairie Mortgage Brokers can help in getting your mortgage approved at the lowest interest rate.
If you put down 20% you can buy up to 160 acres with less than 20% down payment it will be up to the insurer CMHC. The insurer, however, may only include 10 to 15 acres in the value of the home, you could pay for the extra acreage in cash. Note that this isn’t a problem if you put 20% or more of the property value down, since this eliminates the mortgage insurance requirement.
The only exception to this is regarding working farms. A working farm is defined as a property that generates an income. To fall in this category, it needs to be conducting business activity and generating income. A large garden or private orchard doesn’t count. A large spread to raise horses as a hobby doesn’t count as a working farm. If you’re buying a working farm, then the purchase would fall under farm credit or commercial lending. Conversely, there isn’t going to be an acreage limit but instead a financial analysis of the business.
A home loan includes the home and one garage. Your home loan will not cover other outbuildings. You can’t use your home loan to pay for the horse barn, workshop, or back cabin. This may force you to pay cash for the value of those buildings in addition to the mortgage down payment required.
Suppose you want to buy a property appraised for half a million dollars. However, $100,000 of that is locked in outbuildings, not the acres or the primary residence or the one garage. The mortgage lender will only lend you $400,000 which you need your down payment on. You’ll have to pay the remaining $100,000 yourself or take out a separate loan for the remaining balance which we have to add to your liabilities.
A property isn’t considered habitable if it doesn’t have a source of safe water. We’re sorry to say it, but the lovely stream bubbling across the back corner of the property doesn’t count. The property could be supplied by a well or water storage tank or municipal water. It is common for lenders to require a water test before they’ll issue a mortgage, and for the loan to be contingent on the water coming back as safe to drink. They understand that property lacking this key feature will be much harder to sell or require expensive remediation like drilling a new well or even have other concerns such as personal health. Call Grande Prairie top mortgage brokers today to get started 780-357-3993.