5 Things to Know Before Buying a Rural Property.

As cities continuing to grow bigger and busier, a rural home beyond those limits can seem like a dream come true! However, before you dive into country living, there are a few things you should know! Especially, how different it can be to qualify for a mortgage.

1. Check The Zoning

When it comes to buying rural property, it is important to check how the property is zoned. This is vital! Zoning will determine how you are able to use the land, as well as the types of buildings that are allowed and where they can be located. Is the property zoned as “residential,” “agricultural” or perhaps “country residential”?

Zoning could affect the lenders available to you and what you qualify for, as well as what you can do with that property. Differences in lending and foreclosure processes, has caused some lenders to be hesitant with financing mortgages in agricultural/country residential zones.

2. Property Boundaries

Once you have determined how a property is zoned, it is important to look at the land. Requisitioning a survey early in the process will help mark the exact boundaries of your property to avoid future disputes. This is also a good time to get an appraisal done on the land and its value.

3. Considering the Land and Your Mortgage

What many borrowers don’t realize is that land has a drastic effect on mortgage qualification and what you can borrow. In fact, most lenders will mortgage: (1) house, and up to (10) acres of land. If you have a second building or extra land that is being purchased, you will need to consider additional funding on top of your typical 5% down payment.

4. Water and Sewage

When it comes to rural living, many people draw water from private wells and utilize septic tanks for sewage. To ensure everything is safe and in working order, it is a good idea to have an inspection done on the septic tank and water quality as a condition on the purchase offer. Due to the nature of these properties, be advised that inspections may cost more than it would in the city. However, it is important as lenders may request potability and flow tests!

5. Coverage Matters!

Coverage matters, especially when you are living away from the city. When it comes to rural properties, there are two types of insurance that you should consider:

1. Home Insurance: When it comes to rural living, this can be more expensive than city homes due to the size and location of the land and distance from fire stations and hydrants.
2. Title Insurance: This is vital for rural purchases and will protect you from unforeseen incidents with the deed or transfer. It will also alert you to any improper previous use of the property (such as dumping for waste).

If you are thinking about purchasing a home in a rural area, be sure to reach out before you do anything. A DLC Mortgage professional can often recommend a realtor who specializes in rural properties and knows the area best. A DLC Mortgage professional can also help ensure you understand any differences in the mortgage process and qualifying that come with rural purchases.

Written by DLC Head Office Marketing

Original post here.

Getting your first home is a huge financial decision, and as such, finding ways to fund your investment is crucial. Finding the deposit, qualifying for a mortgage, and making consistent monthly payments are all critical aspects to consider. Fortunately, qualifying for a first-time home buyer loan can relieve some of your stress and help you purchase your first home.

What is a First-Time Home Buyer Loan?

A first-time home buyer loan is an incentive by the Government of Canada. Through a shared-equity mortgage, first-time homebuyers qualify for tax-free loans and tax rebates. The federal government launched the program under the First-Time Home Buyer Incentive (FTHBI).

Are You Eligible for a First-Time Home Buyer Loan?

Not everyone is eligible under the FTHBI. You must be a first-time homebuyer who’s never owned a home or owned a home with a spouse or common-law partner but not lived in the house for the past four years. Also, if you have gone through a divorce or broken from a common-law partnership, you may qualify for a first-time home buyer loan.

After passing the above qualifications, you have more considerations. Your wages, investments, and rental income collectively should be lower than $120,000. Note that you can only borrow quadruple this amount, which caps the loan at $480,000.

FTHBI only applies to homes with mortgage default insurance. This insurance applies to all homes where the homebuyer puts a down payment lower than 20%, which is the maximum down payment allowed for homes under first-time home buyer loans.

Why Is It Called a Shared-Equity Mortgage?

In a typical mortgage plan, when you make a down payment for a home, you become the owner of the equity. However, under the FTHBI, the Government of Canada becomes part-owner, and as such, suffers losses and enjoys profits on your home. Usually, the government loans you:

• 5% of the home’s price for a house on resale
• 10% of the home’s price for a new home

What Are the Benefits?

You can save on immediate payments for the down payment and mortgage insurance.

You don’t have to make monthly payments on the loan or pay interest on the loan. However, you have to pay back the loan in 25 years, or if you re-sell your home, whichever event comes first. Unfortunately, the loan repayment is based on the fair market value of the home at the time of repayment or resale. You can pay more or less than you borrowed, depending on the market.

Should I Take a First-Time Home Buyer Loan?

Contacting your mortgage broker can help you determine if you are eligible for a first-time home buyer loan. If you do, your mortgage broker from Dominion Lending Centres can help you weigh the benefits and disadvantages. Contact us today to get started on your journey to home ownership.