The Basics Regarding Land Lenders and Loans

One of the best ways to build up your real estate portfolio is to snap up land that has not been improved yet but is in an area that is likely to see incredible growth over the next few years. Even if you don’t put any improvements on the property yourself, the increase in land value between the time you buy it and sell it can be considerable. However, when you approach a bank about issuing you a mortgage to assist with the purchase of a plot of land, things can go a little differently than they do with a traditional mortgage. Let’s take a look at some things you need to know about how land mortgage lenders operate.

First of all, you’re going to have to put down a larger down payment and pay a higher interest rate for a plot of land than you would if you were getting a mortgage for your own dwelling. Why? The risk for the lender is higher. Sure, if you default on the loan, the lender will get the land back. But the probability of you letting a plot of land go into default when expenses pile up is significantly higher than the probability of you allowing your own home to go into foreclosure if things get financially tight in your household budget. If you’re doing a vacant land refinance, the risk is often perceived as being higher – so your interest rate will be too.

There are also different types of land mortgage loans available depending on your plans for the property. If you plan to start tossing dirt around as soon as you acquire the property, the very first step you need to take when considering the purchase is to find out if the land is zoned for what you want to do, and whether the use you have in mind is legally permitted for that land. If you’re looking in a city center, you could be looking at a property in the middle of a confusing zoning map that was set out decades ago and has been turned into a patchwork quilt by a variety of changes between then and now. You’ll also want to pay for a professional survey to be done on the land. The purpose of the survey is to identify the exact property lines, any easements, points of access, and the exact dimensions. The access will have an impact on the property value – as well as your likelihood of gaining approval for a loan. If you really like the land and want to build, but the zoning is not in place to allow what you want, you would have to request a zoning change, which can be a lengthy process with an indeterminate outcome.

If you just plan to hold onto the land, especially raw land without any improvement plans in sight, is the hardest sort of land to gain mortgage approval for purchasing, because you’re basically purchasing the land to speculate on the future. There aren’t any streets, utilities, sewers or other form of infrastructure. You’ll have to pay property taxes on the land the whole time you’re holding onto it, but banks view that sort of land purchase as the riskiest – so they make it the most expensive in terms of interest rate over the life of the loan. A land loan refinance is one of the costliest refinance loans in terms of interest. Land mortgage lenders often pore through your financials very carefully.

This type of loan is called a “raw land loan,” because the land is “raw,” meaning that there are no infrastructure touches that have been made to it. You can expect to have some lenders ask you for a 50% down payment on this sort of purchase, although there are lenders who will fund the purchase with as little as 25% down. It’s better in these cases to work with a local lender who is aware of the land and knows its potential rather than a larger bank that does not have familiarity with the site. A lot of lenders will treat “raw land loans” as a commercial loan, even if you’re looking at it as a potential place to put down a vacation home. That means that even if you’re not a commercial investor, you need to prepare yourself for negotiation by looking at the ways that the interest is calculated for commercial loans and the other key differences between residential and commercial lending.

One other alternative that works with some raw land loans, especially out in a more rural area, is a seller financed loan. In this case, you make the down payment to the seller and then sign a loan agreement with him for the remainder, and you pay him just like you would pay back an institutional lender. You might end up with interest rates that are higher than the banks, but you can often get a seller to agree to a lower down payment in return. So if you are having a difficult time getting bank approval at the down payment that you can afford (or at all), seller financing is something to consider.

Another type of financing to consider for your land loan is a private lender. There are individuals and entities that are looking to invest in the mortgage market by funding commercial and residential loans, and brokerages like Amansad Financial have built up networks of these lenders, and we are constantly trying to match investors with loans so that it turns into a win-win for both parties: the borrower, who was struggling to find financing for the land purchase he wanted to carry out, and the investor, who was looking for a fairly high rate of return without the risk that the stock and commodities markets currently offer.

If you are looking for a land mortgage in an area that you see as a solid investment, talk to one of our mortgage specialists today. We have relationships with realtors throughout western Canada, so you can find out whether the land really represents the value that you think it does, and with lenders who are willing to put together packages for land loans at a reasonable rate. We look forward to helping you!

How to Buy or Finance Raw Land or for Residential Purposes

Whether you’re considering a land purchase for commercial development or a land purchase for residential purposes (your own house or for building a property for investment), it is a decision that can pay off big time. People who bought up land in rural or semi-rural areas on the cheap in the past, only to watch nearby cities grow closer and closer, have found that their investments have paid off many times over. Land in the outlying areas surrounding cities from Vancouver to Montreal, and many in between, has turned into financial bonanzas.

When you make a raw land purchase in an area zoned for agriculture, or you make a land purchase in a partially developed area, then you could face an uphill battle getting your land zoned for a more marketable purpose. It can take years to accomplish, though – so understanding the zoning of your land is crucial before you sign on the line. Provincial governments will only commit to development plans that last five years, and when the right people ask for change, those plans can change in the blink of an eye. One example of that was the Oak Ridges Moraine, a swath of land between Rice Lake and the Niagara Escarpment. Because Toronto, Mississauga, and other cities in the Golden Horseshoe were growing that direction, investing in land there seemed like a no-brainer. However, in 1989, some petitions went up from several groups to protect that land from development. So it was tied up in court for 12 years, and the Ontario government finally protected it. So those investors had found their land now protected from development by a conservation act – and other investors with land around the greenbelt now saw their land shoot up in value.

So when you’re checking out land purchase, whether to subdivide or develop in a different way, consider the proximity to city infrastructure, such as existing services for water and sewer, because that land is more likely to gain approval for development later. Land that is easy to access and/or nearby major routes for transportation are better investment choices as well, because you won’t have to wait for commuter infrastructure to be put in place.

As you might imagine, getting financing for vacant land is not always easy. It’s one thing to finance a house, or a multi-unit residential building, a factory or a vehicle. After all, if you default on one of those loans, the bank has something tangible that it can seize and sell to cut its losses. The bank can take over land, but it’s much tougher for the bank to recoup its losses.

The elevated risk for the lender means that you will face higher interest rates and fees as a part of the loan. If you’re going to be developing the land right away, expect to put a down payment of around 25% as part of moving toward a construction and development loan. If development is in the plans for further down the road, expect to put as much as 45 to 50% down, in addition to any applicable closing costs or fees – and that’s in an urban market. If you’re buying land in a rural area, the down payment will be even higher.

Land development financing is often much easier to secure than vacant land financing. If you have a plan for putting together a residential development, a golf course, a casino, a hotel, a factory, or even storage sites and self builds, that can go a long way toward helping you put together a financing proposal that will get you the funding you need. Lenders like to work with people who have thorough plans put together and can show them where their investment will pay off.

So if you’re looking to purchase vacant land, the cheapest way is to pay cash. Taking out a home equity line of credit (HELOC) is cost effective if you have to finance some of it. Dealing with a local credit union or bank that you have a strong relationship with is a good way to keep your costs down. If you can’t find a traditional lender to work with you, then Amansad Financial can secure financing with a private lender in the DLGN (Direct Lender Group Network), but you can expect higher interest rates and (in many cases) a higher down payment.

There are some other ways to finance the purchase. You can take what is known as a vendor take back, or seller finance, where the land owner provides the financing. This can work when the seller does not need the cash right away and if you provide a sizable down payment. You can also combine a private loan with a vendor take back. Another solution is to use another piece of property as a form of security for this loan.

Sometimes people purchase land without looking at some of the legal encumbrances tied to the property. Zoning laws influence what you can build on the property, and depending on where the land is, the cost of setting up utilities and services is prohibitive.

You’ll also want to have a soil test done to make sure that there are no environmental factors in the area. Consider the horror story of Hollace Wong, Norman Rothberg and Michael Kibride. These three investors sunk $2.2 million into land on the east side of downtown Toronto. They had performed a market analysis and found that the land was undervalued and would yield a huge profit if they simply flipped it to a developer, who would front the costs of getting the zoning changed from industrial to residential development. What they did not know, though, was that an auto wrecker had once used that site for its business, and their hazardous waste was still on the property. These environmental problems made their property toxic – not just literally but in the sales market as well. While they were pondering what to do next, the bottom fell out of the real estate market, and the investors took a huge loss – even after taking the seller to court.

You’ll also want to bring in professionals to handle the construction and development, rather than trying to handle that yourself, unless that’s your area of expertise. You’ll also want to see the land yourself. There’s a perspective that comes with seeing the land in person, rather than going sight unseen or even relying on Google Maps’ street view feature. That can help you decide whether to buy the land in the first place, or whether to purchase it and subdivide it. In some cases, you can buy a larger lot with a single home on it, tear down the house and replace it with two smaller properties, dividing the property to sell it to two different parties, and increasing your profits. You’ll want to find out, of course, from the city or province, whether subdividing is allowed there.

In summary, there is much to consider when buying land. If financing has become a burden and it’s determined that you can’t secure bank type financing, contact Amansad Financial for private financing alternatives.

How to get a loan for farm land

For farmers or members of local agricultural co-operatives, rural development loans are available through the Canadian Agricultural Loans Act (CALA) Program. Individual farmers can put these loans to work in establishing or developing farms, and co-operatives can use the funds to distribute, process or market farming products. Banks who extend loans that meet the requirements of the CALA program are guaranteed to recoup 95% of any losses on eligible loans from the government. As of 2015, these loans are capped at $500,000 for purchasing land and/or erecting or improving buildings, or $350,000 for any other purposes, such as refinancing or consolidating debts. Co-operatives can only take out an aggregate total of $3 million in financing.

Rural development credit requirements – How to finance farmland

You can apply for financing through this program if you are an existing farmer or are establishing a farm, either full or part time, or if you represent an agricultural co-operative that is made up of a majority of farmers. If you are starting your farm, part of the application process may include putting together an initial business plan as well as an income tax form showing that you don’t have any farm income for at least one year out of the last six. Agricultural co-operatives might need to show a current tax return showing that a majority of its members (50% plus 1) have made farm income. To satisfy the CALA requirements, farming consists of one or more of the following: producing crops in a field (cultivated or not), as well as horticultural crops; producing milk, eggs, maple syrup, honey, fibre, tobacco, fodder crops, and or wood from lots; or raising poultry, livestock and/or animals with fur.

Rural development funds for real estate property

If you want to use these rural development funds for real property, you can either purchase property with the money, or you can build or repair any structure or building on an existing farm. You can also purchase a structure or structures at another site and move that structure to your farm and (when needed) finish the building on your site. Basically, as long as you’re building or improving anything that will benefit the operation of the farm, you can use CALA rural development loan funds toward that purpose.

There are a few uses that are not ineligible. You can’t make improvements to the family dwelling, even if it’s on the farmland. You also can’t use it for any quota purchases, or to consolidate ordinary loans from a lender. Purchasing short term feeder livestock is also not an approved use for CALA loan funds.

If you are taking out this sort of loan, you have a number of different term options. You can set up payments on a basis that matches the income pattern of your farm, ranging from monthly or quarterly to semi-annually or annually. When you have a fixed rate loan, you’re allowed to make a 10% prepayment in addition to the minimum payments without any penalty. The purpose of this is to maximize your flexibility while keeping the bank interested on the profit side. CALA loans are generally available starting at a minimum of $10,000.

Security for CALA loans can take on a wide variety of forms — which makes sense, given the wide variety of potential uses that the money can fund. This could include some or all of the farm property, liquid investments that you or the co-operative owns, or other business assets.

In addition to CALA-specific funding, banks such as TD Canada Trust offer other financing options for farmers and agricultural co-operatives. An agricultural operating line of credit is an idea for farmers who do not know exactly how much they want to borrow from one month to the next but want access to credit. Farming is an industry that offers irregular income levels even in the most prosperous years, and having access to that line of credit means that borrowers only have to pay interest on what they use instead of taking out larger loans and then having more of a debt to pay.

Amansad Financial has relationships with lenders in Western Canada that offer financing to farmers and agricultural co-operatives, either through CALA-authorized loans or other lines of credit. Give us a call so that we can help you find the financing that you need to keep your farm or co-operative up and running.

Land Purchase / Refinancing FAQ's

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.

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.

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.

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: 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.

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: 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.

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

(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.)

Location Based Land Financing Info:

How to Buy Land in BC

Are you considering buying land in BC? Whether you’ve found a lot in or around Vancouver or Victoria, or if you’re buying up land in a more rural part of the province, if you plan on financing the purchase, there are some things you need to know about a land loan.

Required down payment on vacant land in BC

Let’s start with the way that the banks tend to view land loans. If you take out a mortgage on a home purchase, the banks realize that you have a vested interest in staying out of default, even if your finances get tight — because you don’t want to have to leave your home and have your property foreclosed. However, you’re not going to have that same connection to a vacant lot in most cases, so if you find your income dropping or have some other emergency expenses get in the way, you’re not going to be as averse to letting some land enter foreclosure. So you can expect a higher interest rate and a higher down payment requirement. That helps the banks justify the higher risk that is associated with lending for land without improvements.

The type of loan that finances your land purchase depends on what you want to do with the land. Some people buy land to hold onto for a future investment, while others buy land with the express purpose of putting up buildings fairly quickly after closing. Banks generally do not like land purchases that have speculative use. It’s important to make sure that the property is zoned for the use you have in mind, which means you need to take out a professional survey on the land.

Of all of the types of land loans out there, the hardest to take out can be ones for land that does not already have any improvements or infrastructure on it. Even if you’re buying land without any connection to utilities or any other sort of infrastructure, though, you still have to pay property taxes on that land — even while you’re not using it and it’s just sitting there.

How much down payment for land in BC

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.

Amansad Financial has land loan experts who can help you with individual questions about your own situation. However, here are some questions that you’ll need to find the answers to about the land in question before you start considering making an offer of your own:

  • Do the local and provincial entities already provide services to the land, such as trash and recycling pickup, high speed Internet, a wired land telephone line, or mail delivery?
  • Do such issues as soil contamination cause a problem for the use of the land?
  • Is the city or province considering rezoning the land, or any part of it?
  • Are there any restrictive covenants in place that would affect your ability to do what you want with the land?
  • Does the land have a proven water source? If it does, how deep does it go into the ground?
  • Is there already a system for removing wastewater from the property? If you needed to put in a septic system, could you?
  • Is the title clear on the property? If not, is there a clear list of liens that are already in place?
  • Do any easements exist on the property that would allow your potential neighbors, utilities and other entities onto any part of the land?

If you have any questions about whether the piece of land that you are considering is a good investment for you — or whether the loan you are considering is right for you — contact Amansad Financial a call today. We’ve helped many customers find the land loans they need, and we can help you as well!

How to Buy Land in Alberta

So how do you buy land in Alberta for use such as for a manufactured home or acreage? When some people think about investing in real estate within Alberta, they focus on properties in Edmonton, Calgary and the surrounding metropolitan areas. However, Alberta has just as much of a legacy of wide open spaces, ranching and a close relationship to nature as the American states of Colorado and Wyoming. Before you rush out and buy some acreage under the big sky, though, there are some important things to consider when buying land in Alberta. Then to fast track the process you can pre-qualify using the form at the end of this article.

Things to Consider when Buying Land in Alberta

For buyers wondering how to buy land in Alberta, they must first consider there is a reason why most urban areas are not like the wide open spaces. The conveniences that people have developed for urban life, covering everything from municipal sewer systems and climate control to paved roads, are not always accessible in rural Alberta. If you live in Edmonton, you just turn on a tap to get safe drinking water. If your buying land in Alberta for a ranch far from the cities, you are likely to have to sink a well or two to find water that you can use. On a rural property,  septic systems requires regular maintenance as well. You have to deal with incursions from pests, damage to the access roads to your property, dealing with garbage removal and knowing what to do when the dangers of grass fires and flooding show up.

In some parts of Alberta, the province has set aside land as an environmental reserve. This is common on swampy areas or places that provide natural drainage, as well as steep slopes or along rivers, lakes and other bodies of water. The purpose of these environmental reserves is to shield that land from degradation or pollution, as well as to guarantee continued public access to the shores adjacent to bodies of water. Land that is set aside as an environmental reserve cannot undergo any alteration or development. You can’t remove any vegetation, including trees; you can’t erect any buildings on reserve land. If your property is adjacent to an environmental reserve, you need to be aware of the restrictions before signing the purchase agreement.

Alberta also features a variety of zoning laws that have often been put in place for land that is far from existing cities because of planning for future development. It is important to know what the zoning is on a parcel before you consider making a purchase. Buying wide open acreage is a tempting prospect for many people, but part of the due diligence in the process is making sure that you don’t end up with land that you can’t use the way you want to. If you put up a building that violates zoning requirements, the municipality or province can require you to get rid of that building at your own expense.

Buy land in Alberta

So now that you know about some of the red tape involved with buying land in Alberta, if you’re still ready to buy some acreage, the next process is coming up with your funding. Some of you may be able to qualify for a loan from a bank, but if you can’t, you have other options out there. Amansad Financial has a network of private mortgage lenders who are ready to provide funding for people who can’t qualify on the basis of the difficult bank regulations. The lender fees are reasonable, and we provide the connection to private mortgages for as much as 50 percent of LTV and potentially higher if the zoning is favorable and the property is closer to a metro area. Additional security can also increase the LTV. Because the LTV is low, our lending partners rarely require income verification; the property itself serves as the security. Our approval process is fast, so both buyer and lender get their answers quickly.

Minimum down payment for land in Alberta

Typically you need to put down a larger down payment and pay a higher interest rate for a plot of land than you would if you were getting a mortgage on a home since the risk for the lender is higher.

Get Approved to Buy Alberta Land

Amansad Financial has land loan experts who can help you with individual questions about your own situation. However, here are some questions that you’ll need to find the answers to about the land in question before you start considering making an offer of your own:

  • Do the local and provincial entities already provide services to the land, such as trash and recycling pickup, high speed Internet, a wired land telephone line, or mail delivery?
  • Do such issues as soil contamination cause a problem for the use of the land?
  • Is the city or province considering rezoning the land, or any part of it?
  • Are there any restrictive covenants in place that would affect your ability to do what you want with the land?
  • Does the land have a proven water source? If it does, how deep does it go into the ground?
  • Is there already a system for removing wastewater from the property? If you needed to put in a septic system, could you?
  • Is the title clear on the property? If not, is there a clear list of liens that are already in place?
  • Do any easements exist on the property that would allow your potential neighbors, utilities and other entities onto any part of the land?

Buying Land in Saskatchewan

If you want to take out a loan for buying land in Saskatchewan, there are a few things you need to know about borrowing for property that does not have buildings or other improvements on it.

How much down payment to buy land in Saskatchewan

First of all, you’re probably going to have to put down more than you would for a home (which is typically 20% if you want to avoid mortgage insurance premiums and you’ll likely have a higher interest rate. The reason for this is that the land is the only collateral. An owner has a much greater interest in keeping the home where he lives from foreclosure than he does from keeping a piece of open land from going into default, say the banks, which is how they justify the higher interest.

Of course, the type of loan will vary with the plans that you have for the land itself. If you’re going to start building fairly soon after you close on the land, you have to make sure that the zoning of the property matches what you intend to do, so you’ll want to order a professional survey. This document identifies the property dimensions and lines, as well as any easements and required access points. Access and easements have an effect on the value of the property as well as your ability to secure financing. If your planned building will go in an area that has not yet been zoned for development, you’ll have to ask for a zoning change to suit your plans. After you find out whether you can use the land the way you want to, you can apply for the loan.

Property in Saskatchewan

If you’re buying land in Saskatchewan, the hardest kind of property when it comes to financing is unimproved land — raw acreage in saskatchewan that is not connected to any improvement plans. This land has no streets or connection to a sewage system, utilities or other infrastructure. You’ll have to pay property taxes on this land, ironically, even though the existing amenities are virtually nil.

So how much higher is the down payment? Depending on the lender, this can go as high as 50 percent. A local lender that has more familiarity with the area might be more flexible than a larger bank that doesn’t know the town or surrounding area. Amansad Financial has connections with a variety of land lenders who provide financing all over Saskatchewan.

Some lenders view land loans as commercial mortgages, even if you don’t plan to start a business on it. The repayment terms on commercial loans are somewhat different from residential loans, so you’ll want to ask your land loan expert at Amansad Financial. Here are some questions, though, that you may want to consider before you fall in love with the piece of land:

  • Does that land already have a proven water source? If so, what’s the depth? Wells are valued by the depth of digging required.
  • Does the land have a wastewater removal system in place? Is the land suitable for a conventional septic system?
  • Does the seller have a clear title for the property, with evidence that he owns it legally and with a list of any liens? Has the lot been legally partitioned?
  • Does the land have any environmental issues, such as soil contamination?
  • Does the land have any easements that grant other entities access to some of it?
  • Does the seller have an updates survey with boundaries, buildings, improvements and setbacks?
  • Is the municipal or provincial government studying the land for rezoning or land use in the future?
  • Does the land come with any restrictive covenants that would keep you from doing things you want, such as levelling the soil, clearing some trees or starting a home business?
  • Does the land already have such services as mail delivery, telephone, Internet, or garbage and recycling pickup?

Before you make an offer on a piece of land, figure out what you want to do with it — and whether you’ll be allowed to. You don’t want to end up with a useless piece of land, because then you’ll be paying property taxes on something that you can’t use — or sell.

Buying Land in Manitoba

People who are considering buying land in Manitoba — and taking out a loan to do it — need to keep a few things in mind as they move toward the application process. Loans on empty land work a little differently than loans for residential and commercial buildings.

The main difference, at least from a monetary point of view, is that you should expect to put more down with the purchase. You should also expect a higher interest rate on the loan. The reason for this is that banks view loans for land as carrying more risk than loans with homes or other buildings on them. Foreclosure on a borrower’s home is a lot more detrimental than foreclosure on a lot that a borrower owns, so if money gets tight, the bank reasons, the payments on that lot will become less important than payments on the borrower’s primary mortgage.

Planning to Buy Land In Manitoba

The plans that you have for the land will influence the loan as well. Some people buy up land for development down the road, while others plan to break ground the day after they close on the lot. The closer you are to breaking ground, the less risk the bank may assign to your loan, particularly if you plan to live on the land after you’ve built a dwelling. Before you make your offer on the land, though, you’ll want to find out what the zoning laws are for that land. You don’t want to plan to start a child care in a building on property that is zoned industrial, for example. In addition to finding out the zoning, you also want to get a professional survey ordered. This lets you know the exact boundaries of the land, as well as any easements that allow neighboring property owners, utilities and other people or companies onto the land at particular points.

If you’re buying land in Manitoba, the most difficult loan to secure is for land that does not have any improvements at all, such as access to water or buildings already on site. The irony is that, even though the land might not have any amenities or improvements, or even access to utilities, but you’ll still have to pay property taxes for land that is just sitting there, month after month, while you try to negotiate access to basic services.

You’re probably wondering how much more of a down payment lenders will require for a land loan. If you’re buying a house, you can get in for as little as 5 percent down in some cases, as long as you don’t mind paying mortgage insurance premiums. To avoid these costs, you want to put 20 percent down on a house. A lender for a land loan may let you have the financing with 25 percent down, but some lenders require as much as 50 percent down to grant that sort of loan.

Here is a checklist of questions that you will want to have answered about the property before you apply for financing to purchase it:

  • Is the title on the land clear, or is there at least a clear list of the liens on the land?
  • Does the land have a proven water source, or will you have to have one dug?
  • How is wastewater going to be taken away from the property? If there’s no system, will the land support a septic system?
  • Does the property come with any easements that let other entities onto the land?
  • Does the mail delivery come to the land already? What’s the deal with trash and recycling pickup, cable television, wi-fi and other services?
  • Are there environmental issues that could hinder your use of the land?
  • Is there an available survey that is up to date with the boundaries, as well as any buildings and other improvements?
  • Is the province or city considering rezoning the land for any reason?

Amansad Financial Process

  • Application sent to applicant(s)
  • Application returned & reviewed
  • Appraisal Completed & Commitment Issued
  • Commitment returned & sent to DLGN
  • Commitment signed by DLGN & instructed to Lenders lawyer
Simplified

Most Other Brokerage Firms

  • Applicant sent to applicants
  • Applicant returned & reviewed
  • Applicant sent to 1 private lender for underwriting
  • Underwriter sends to Lending Committee for review
  • Commitment returned to brokerage firm if approved. If not approved, go back to step 3 with new lender
  • Commitment Issued by Brokerage firm to applicant(s) with summary of terms and conditions
  • Commitment returned to brokerage firm
  • Commitment sent back to Private Lender by Brokerage Firm
  • Lender Committee completes final review
  • File Instructed to Lenders Lawyer for closing provided key conditions are satisfied by applicants.

8 TOP REASONS TO USE AMANSAD FINANCIAL PRIVATE LENDING SERVICES

1. Fast & Efficient
Amansad Financial has a large DLGN (Direct Lender Group Network) that will fund mortgages throughout select provinces in Canada and will generally provide a response within 24 to 48 hours. Our process is generally 50% faster than most other competitors. From the initial assessment to closing with the lawyer, our transactions move extremely quickly.

2. Private Lending Expertise
Amansad Financial specializes in providing great insight and solutions for customers that do not qualify for traditional bank mortgages. A high majority of the customers we assist have either bad credit and/or simply require a fast mortgage.

3. Extended Lender Relationships
In addition to the DLGN, Amansad Financial also has established relationships with numerous MIC (Mortgage Investment Corporations) across the county that are able and willing to fund large amounts with fair terms.

4. No Upfront Costs To You
Amansad Financial does not charge an upfront fee to complete an initial review and assessment. We do not collect any monies direct from our customers. All applicable fees are deducted from the proceeds of the mortgage and completed by the lawyer.
Note: A Commercial Mortgage Application may be subject to a Letter of Engagement and a Retainer Fee after an initial review of the file.

5. Independent Legal Advice
Amansad Financial requires that all our customers get ILA (Independent Legal Advice) on all mortgages.

6. Transitionary Credit Improvement Services
In Cases where private lending is required primarily due to bad credit, we have strong relationships with 3 rd Party Credit Improvement Companies that will provide you the tools to improve your credit so that you can get back to traditional financing quicker. Private mortgages are not meant to be long term. A Private Mortgage is a means to get you from point A to point B.

7. Transitionary Mortgage Professionals
Amansad Financial Services has partnerships with excellent professionals within the brokerage firm; Brokers for Life Inc. They will be available to assist you to transition you from a private mortgage to a traditional or semi-traditional mortgage before your mortgage renewal.

8. Ongoing Communication
Even after your private mortgage is in place, Amansad Financial will stay connected with you and always be available to address any questions.

If you’re going to take out a private mortgage, you’re starting a relationship with a lender that will work a little differently than what you can expect from a bank or other traditional lender. Let’s take a look at some of the key differences, so you’ll know what you have in store.

Repayment History

Most people take out a private mortgage to get started on home ownership while they’re still repairing their credit. Private mortgages generally have short terms (often one to two years) and sometimes just allow interest-only payments. Private lenders do not have to renew mortgages when the term expires, so you want to keep your options open by making your repayments on time. Your credit score will improve (increasing your chances of a transition to a bank or other traditional lender at renewal). If you realize that you need to adjust your withdrawal date for a particular payment, give your lender at least a week’s notice.

Employment Changes

If you change employers during the term of a private mortgage, there are no requirements mandating that you update that information. However if you do provide that update, you strengthen your relationship with the private lender, showing that you are serious about bettering your financial situation. Even if you haven’t notified your private lender of the change, that will be a requirement for extending or renewing the loan in many cases.

Improving Your Credit

If you took out a private mortgage while you intended to improve your credit, there are improvement counselors who can help you get that score up. The purpose of this is to help you qualify for a bank loan when the private mortgage term expires – which will save you tens of thousands of dollars over the amortization of the entire mortgage.

Obtaining New Credit

Try to avoid opening new lines of credit, and keep your credit inquiries to a minimum during the term of your private loan. These activities can affect your score adversely, which definitely will not help you when it’s time to shift from a private lender to a bank or traditional lender.

The Value of Communication

Remember – a private lender is entrusting you with a great deal of capital. The clearer your communication is, the stronger your relationship will be. Private lenders are much more willing to work with borrowers who are honest and upfront.

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