Purchasing in the country?

 

Thinking about a move to the country?  Looking for more land?

There are definitely more things to consider when purchasing a property in any rural area; particularly when it comes to financing an agriculturally zoned property.  On top of the regular items on your checklist, you will need to consider the following:

Zoning – Which “A” zoning

Similar to residential zoning, different properties are zoned according to their activity.  Different zonings may require a different amount of down payment and structuring.

Hobby farm or livestock - Racetrack or sporting

The majority of Schedule 1 banks and most monoline lenders do not like properties labeled as a hobby farm, especially if the property houses livestock or a racetrack.  There are a few specialized lending companies that deal strictly with agricultural purchases to help you with these types of properties.

Sewer system or septic

With most purchases of properties with septic systems; the lenders will be looking for septic certificates / inspections.  They will also look for well certificates as well.

Acreage / size of land

The size of the property is of utmost importance.  In recent years, most lenders have restructured their lending policies on properties over 10 acres. If you have less than 20% down payment on a property, you will need the property to be insured by CMHC or Genworth.  The insurance companies will only give value to the house, plus 10 acres.  This is paramount when planning a purchase.  The more acreage, the more down payment may be needed.

Out buildings

Most people would think that out buildings including shops, sheds and pool houses would add to the value of the property.  They actually do the opposite.  When valuating properties, appraisers will value the house, the acreage and determine the value of the outbuildings.  Once they determine the value of the out buildings, they usually reduce the overall value of the property.  The reason for this is resale value.  Not everyone is looking for a property with a huge shop or multiple buildings or racetrack. 

The purpose of this blog is not to dissuade you from purchasing outside of the city, but there are different lending rules and guidelines that you need to be cognizant of. 

The bottom line; consult a professional before you make a purchase.  We can help guide you through the guidelines of any residential, agricultural or commercial purchase.

Be Wise, call the Mortgage Guys!

Please feel free to contact me at 519-630-5905 or at Andrew.young@bemortgagewise.ca.

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