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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 45% or greater (sometimes a bit less). 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 Rent-to-Own 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: The initial documents you will require are 2 pieces of Valid ID for all applicants, a current mortgage statement, property tax assessment notice, purchase agreement (if applicable) and an appraisal from an approved appraiser. More documentation may be required depending on the facts of your file.

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:

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.

Partial owner/seller finance. 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.)

100% owner/seller finance. 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.

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. Private lending is generally the only option, and a great short term solution to get you from Point A to B.

Answer: Turnaround time, brokerage firm pre‐underwriting, and transfer of trust from our DLGN (Direct Lender Group Network)

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Daniel K. Akowuah | Mortgage Professional / DLG Underwriter
Toll Free: 1(877)756-1119 | PH:1(780)756-1119 | FX:1(877)238-7794
 DLC Brokers for Life Inc. (Brokerage) - 2nd Floor, 5303 91st Edmonton, AB T6E 6E2

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