8 GREAT QUESTIONS REGARDING LAND FINANCING

Answer: The required down payment for land varies based on land type, use, location, and credit. Generally, if the land is acceptable to a private lender you’ll require 35% – 45% or greater. Having additional qualified property as collateral will improve your chances of securing financing on raw land and in some cases will reduce the down payment required.

Note: The Credit Unions and Bank may qualify you for less if you intend to develop the land right away.

Answer: Purchasing land is no different that purchasing other real estate. It is suggested when buying land (like other real estate) to seek the services of a real estate professional because more due diligence may be required.

Answer: If you bank won’t assist. Contact Us. We may even be able to use other quality real estate to lower your down payment requirement. If owning the land isn’t a an immediate must, you may consider arranging a Vendor Take Mortgage with the Seller.

Answer: Tax is something that nobody can avoid, and should not avoid. An attempt to avoid taxes is tax evasion. However, there are ways to defer taxes to minimize the amount depending on your tax plan. For some owner’s of properties that want to avoid paying immediate capital gains tax, or buyer’s that do not want to or cannot pay immediate land transfer tax; owner financing is good strategy to discuss with your accountant strategist.

Answer: A standard file will require Photo ID verification, Banking verification, CRA Tax Verification, an appraisal, a current mortgage statement (if applicable), a current property tax statement (if applicable), and confirmation of property insurance as listed below:

• ID – Digital Encrytped Verification using 1000+ data points
• Bank Statements – Digital Encrypted Verification Service that is supported by 240+ Canadian Financial Instituions.
• CRA Personal Tax – 3rd Party Document Retrieval Services
• Property Tax Balance Statements (If applicable)
• Mortgage Balance Statements (If applicable)
• Income Statemetns (If applicable)
• CRA Corporate Tax (If applicable)
• Property Insurance
• Appraisal

Our brokerage processes are in place to curb Identity Theft and enhance Fraud Protection and Detection.

Note: Some more complex files may require more documentation.

Answer: Owner financing for land is no different than owner financing for any other Canadian Real Estate.

The 3 most common methods of this financing are as follows:

1. Rent‐to‐Own – (Generally the seller has a mortgage on it, and is basically allowing an individual to make scheduled payment until they are in position to secure financing with a traditional lender. Title of the property does not switch over, but a caveat is registered on the property to protect the buyer’s interest.
2. Seller Financing (Partial) – A buyer obtains a mortgage from a 3rd party which covers a majority of the purchase. The shortfall owed to the seller is registered as a second mortgage on the property. Title of the property switches to the new owner. (The 3rd party refinances and down payment needs to exceed the current mortgage on the property and must be paid out from the proceeds.)
3. Seller Financing (100%) – This is the same as the partial; however the owner/seller has no mortgage on the property. The Land Transfer is optional depending on the agreement, but it is recommended that the buyer registers a caveat to protect their interest in the property is Title isn’t transferred.

Note: If traditional bank financing and the above options are not available, our Brokerage may be able to assist with a Private Mortgage.

Answer: YES. This is an option. This is referred to a “blanket mortgage” or “Inter Alia” mortgage. This type of mortgage is rarely offered by traditional or semi‐traditional lenders unless you have a commercial baking relationship.

Answer: The process is fast provided we are receiving requested documents in a timely fashion. The entire process can be completed in 2 weeks provided there are no delays. Funding can generally occur within 7 business days after property appraisal/valuation has been received and reviewed.