What You Need to Understand about Buying Land
If you can’t find your dream home, the solution may be to build it. To achieve this, you have to buy land to build on. Some buy land to build a home on immediately, while others hold onto land in the hope of building on in years or as an investment. Land purchases aren’t insurable the way you can insure a home, so you have to put at least 25% down for a land purchase. Consult with a Grande Prairie mortgage broker on your options for mortgaging a piece of property.
There are different serviced lots you can buy. Fully serviced land has access to all municipal services – water, sewer, natural gas, electricity. If your lot is fully serviced you will not have that fee added if you do a construction draw mortgage with a builder. However, the land must be zoned residential for most mortgage lenders to issue a mortgage. If you want to build a mixed commercial-residential property or commercial building, you need to talk to a commercial lender.
A partially serviced home has electricity and natural gas but not water and sewer this would add extra fees from the builder when doing a build as they have to add these costs to the quote.
Expect to put at least a 25% down payment on large acreage. Depending on the size of the lot and the area you are buying marketability of the land you may need to put even more than 20%. Marketability affects the down payment. If there is little demand for property in an area, you’ll have to raise a larger down payment.
New acreage homes with a detached home plus a garage can be financed with 5% down payment however the insurer will determine how much land will count towards the value any difference will have to be paid out of pocket on top of the down payment generally between 10 and 20 acres will be allowed in the value. If you want to build more buildings, you’ll have to finance those separately. Once you hit over 20 acres, you start to run into rules that require a conventional mortgage for that land and home requiring 20% down payment. Reach out to your Trusted Mortgage Brokers in Grande Prairie who will include the full 160 acres in the mortgage.
Working farms won’t qualify for a conventional mortgage. Instead, they’ll need to be bought using a farm loan or commercial loan. If the land is zoned agricultural, you may have trouble qualifying for a residential mortgage. Call Grande Prairie Whalen Mortgages today! 780-357-3993