For many Canadians, the dream of home ownership includes the opportunity to build a brand new home from the ground up on their own land, instead of purchasing an existing home and making changes over time. For other investors, the chance to make money buying commercial land in Ontario and other provinces is also an enticing one, whether one plans to build for one’s own purposes on the land or hold onto it in a rising market and wait to sell it at a profit. When you are buying vacant or raw land in Ontario, there are several things that you need to keep in mind to make your investment go smoothly.
Whether you or buying residential land in Ontario or buying land for other purposes, you must make sure that the title is clear. Land that has liens attached to it could end up coming back to haunt you after closing. This is normally part of the due diligence that a title company performs, but it is also one reason why you should have an attorney peruse all of the paperwork connected with your land purchase.
Access to services is another crucial factor to consider when buying vacant or raw land in Ontario. Is there a water supply from a local municipality or provincial entity, or will you be operating on a septic tank system and freshwater well? Are those items in place already, or will you have to install them if you want to make improvements on the land?
What is the zoning on the land that you want to purchase? If you’re buying commercial land in Ontario, provincial laws will have some limits on what you can build there. If you’re buying residential land in Ontario and want to build a single-family home, make sure that zoning permits that. In some residential-zoned areas in the province, only multi-family buildings are allowed. This is an important factor to consider before you start making offers.
It is also a wise idea to have your construction plan ready to go before purchasing residential or commercial land in Ontario. That way you can be sure that the ideas you have for the land will match local zoning regulations.
Understanding land values is important when buying vacant or raw land in Ontario. Depending on a variety factors, ranging from nearby access to transportation to decisions about highways and other public improvements that can be years away, the value of the acreage you plan to purchase can change significantly. If you do not live in Ontario, you will want to enlist the advice of a residential or commercial realtor on the ground to find you the best plot of land for the plans that you have. This can end up costing you in fees, but those fees can end up being much less than the amount of money that you lose from making a poor investment decision in a plot of land that you end up being unable to sell.
How much down payment for land in Ontario
When you’re buying a house on land, you generally have to put at least 5 percent down (with a high-ratio loan), or 20 percent or more if you want a loan without mortgage insurance. When you’re taking out a land loan, expect to put between 25 and 50 percent down. The difference depends on the policies of the lender, the piece of land in question and the uses that you have in mind for the land. There are different ways to purchase land if you don’t have the required down payment. If you currently own other prime real estate in Canada with lots of equity, it can be added to the loan as collateral to either reduce or eliminate the need for a down payment.
At Amansad Financial, we specialize in helping people obtain funding private mortgages for land purchases as well as for other real estate transactions. If you’re looking to buy land in Ontario, give us a call and we will try to connect you with a local realtor and sourcing for financing.
(Adequate Equity + Qualified Real Estate = Mortgage Approval)
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