Many people dream of leaving bustling City Life for a slower, more fulfilling life in the country.
There are some additional considerations to take note of when Purchasing an Acreage Property and differences in Qualification for securing financing these types of Properties.
As Licensed Mortgage Associates, we can assist you with the process and answer any Questions.
Dennis Ward / Lorraine Revet Mortgage Associates Mortgage Tailors
There are many questions you may have about purchasing an Acreage. We have the answers and can provide guidance to help you through this process. Here is a Top Ten List of the most Common Questions. If your question is not listed please feel free to Contact us at any time. Our Assistance is completely free.
In Canada there is a minimum of 5% down needed to Purchase an Acreage Property.
That being said, things that may affect the Amount of Down Payment needed are Size of Property ( number of Acres) , Type of House, Location of property in regards to nearest Populated City, and types of Buildings on the property and intended use of the Property.
Lenders vary on the Number of acres a property can Include. Most will go to 5 Acres but there are some lenders that will go to a maximum of 160 Acres. Depending on the Lender, they will also allow only a certain portion of the Land to be included in the Appraised Value of the Property for the Purpose of determining the Loan to Value of the Deal. Larger Properties may require a larger Down Payment to qualify for Financing.
Most Lenders have the same rules on types of Homes that qualify for financing for Acreage Properties in comparison to Urban Homes. One type of home that does have restrictions are Modular or Manufactured Homes. They must be permantly affixed to the Property with set guidelines and have Age Restrictions. There are solutions for these Types of Properties available through our Numerous Lenders and may require a Larger Down payment.
Typically Garages ,Personal Use Shops and Sheds are Allowed on the Property.
Additional buildings above a House and Garage may not be used in the Appraisal Value of the Property to determine the Loan to Value of the Financing. This may require a Larger Down Payment to Qualify for the Financing. Buildings that are used for Business Use, Livestock or Farming, may make the property ineligible, as it now falls into a different Zoning Usage. For Business, Agriculture or Farming Use type Properties, a Different type of Financing is Utilized.
Acreage Properties must be Zoned Residential, Ag Residential, and in some cases Mixed Zoning is allowed. Farming and Business Zoning is usually not allowed.
Two of the most common Additional requirements for an Acreage Property are the Source of Potable Water and the Type of Sewage System in Place.
Acceptable Water Sources include Wells and Cistern or if available Municipal Water. There may be a requirement to get Water Testing done or to supply a Current Water Evaluation on the property as a condition of Finance.
Acceptable Sewage systems include Holding Tanks, Sewage fields, Septic Tanks or in some cases Lagoons. Again there may be Testing or Current Certification of the Sewage system as a condition of Finance.
Simply stated, every Lender will have different Rules regarding how close to an Urban Center a Property has to be to Qualify. Most Lenders will have a Distance versus Urban Center Population Size Ratio Guide that they utilize, while some Lenders will finance anywhere in Alberta. Having Access to Multiple Lenders allows us options in Placing your Mortgage with an Acceptable Lender that will suit your needs and situation.
One of the Most common additional Factors you may see when purchasing a Property in Alberta is the Presence of an Oilfield Component. This may include a Oil Well, Pump Jacks, pipeline, or Pipeline access on the Property. Different Lenders have different rules in place for these types of properties.
Qualifying for an Acreage or Rural Property is very Similar to Qualifying for a Urban Property.
Income Requirements and Debt Servicing Ratios are the Same. However, you cannot use Income Generated by the property such as Farming income to qualify as this is a different type of Zoning and would not qualify.
There are additional qualifying factors for the Property as stated above that may affect the amount of Money Down needed to fit within the acceptable Limits of Loan to Value of the property.
We always recommend using a Professional Realtor when purchasing a Property. When Dealing with Acreage and Rural Properties it is in your BEST INTEREST to use a Realtor. All the Additional components involved with these types of properties make a Realtor an Essential Requirement. Their Experience and commitment will ensure your best interests are being looked after and the Purchase Experience will be a Positive one.