1. How much down payment is required to buy land in Canada?
2. How do I purchase land?
3. What is the Loan‐to‐Value (LTV) that you can finance against my property?
4. How do I avoid land transfer tax in a land sale?
5. What documentation will I need to provide?
6. How does owner financing work for land?
7. If I own other real estate, can I use as it as additional security to get the mortgage loan?
8. What sets Amansad Financial Services apart from other companies?
FAQ 1. How much down payment is required to buy land in Canada?
Answer: The required down payment for land varies based on credit, and the lender type. If you are buying residential land with the intention to build and once have good credit, some credit unions will approve with 25% ‐ 35% down payment plus applicable fees and closing costs. Private mortgage loans generally require 45% ‐ 50% down payment or greater plus applicable fees and closing costs.
FAQ 2. How do I purchase land?
Answer: Purchasing land is no different that purchasing other real estate. If using a realtor, the designated realtor will ensure you complete the appropriate compliance and realtor brokerage documents to complete the transaction. If the sale is a private sale, less documentation is required, but it is best to ensure you complete your own required due diligence on the property and to be aware of all closing costs such as land transfer tax, etc. It is suggested when buying land to seek the services of a real estate professional.
FAQ 3. How do I get a mortgage loan against land I own if my bank won’t assist?
Answer: If you bank won’t assist, it is best to seek the assistance of a broker that can provide you with alternative options. We provide short term private mortgage solutions of between 1‐3 years that will allow you to access the funds needed until you qualify to return to your bank and refinance for the long term.
FAQ 4. How do I avoid land transfer tax in a land sale?
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.
FAQ 5. What documentation will I need to provide?
Answer: On standard urban residential land purchase where the loan value does not exceed 55%, basically all this required is 2 pieces of Valid ID, a current mortgage statement, property tax assessment notice, and land only appraisal from an approved appraiser.
FAQ 6. How does owner financing work for land?
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. 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.)
3. 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.
FAQ 7. If I own other real estate, can I use as it as additional security to get the mortgage loan?
Answer: This is always a consideration. At times, there may not be enough equity/down payment in the property, so if you own other real estate with adequate equity, this will be considered. 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 relationship. Private lending is generally the only option.
FAQ 8. What sets Amansad Financial Services apart from other companies?
Answer. Turnaround time, brokerage firm pre‐underwriting, and transfer of trust from our DLGN (Direct Lender Group Network)
BFLI | Amansad Process
1. Application sent to applicant (s)
2. Application returned & reviewed
3. Commitment Issued by Amansad to applicant(s) with summary of terms and conditions
4. Commitment returned & sent to DLGN
5. An investor from the DLGN signs off instructed to Lenders lawyer for closing provided key conditions are satisfied by applicants.
Most Other Brokerage Firms
1. Applicant sent to applicants
2. Applicant returned & reviewed
3. Applicant sent to 1 private lender for underwriting.
4. Underwriter sends to Lending Committee for review
5. Commitment returned to brokerage firm if approved. If not approved, go back to step 3 with new lender
6. Commitment Issued by Brokerage firm to applicant(s) with summary of terms and conditions
7. Commitment returned to brokerage firm
8. Commitment sent back to Private Lender by Brokerage Firm
9. Lender Committee completes final review 10. File Instructed to Lenders Lawyer for closing provided key conditions are satisfied by applicants
(Every land finance situation is unique and there are always exceptions on a case by case basis. If your question is not here, contact us and we’ll be sure to get back to you at our earliest convenience.)