Guest contributor: Emmanuela Urbani, Licensed Mortgage Agent
Many people these days are looking at moving out of major cities. Maybe you are looking into moving out of the major city and into a less expensive home farther away. Or maybe, you want your own little piece of tranquility in the countryside. Either way, let’s take a look at some important factors and how they might affect your ability to get a mortgage on your new home or property.
How zoning affects your mortgage
The zoning of your future home can affect what your mortgage will look like. Residential zoning tends to be the easiest to finance. Whereas agricultural and rural zoning might cause you to look outside the box for financing. This isn’t a reason to discount a property simply based on zoning. It is, however, important to discuss with a mortgage broker, such as myself, to ensure you understand the options and all of their nuances.
Considering the population of the nearest small town
Another consideration is the population of the town or nearest largest town close to the home you are considering. Lenders look at the population of the town you are in as well as how many kilometers the property is from the nearest town of 50,000 and 100,000 people. They also look at the overall region and how far it is from major metropolitan areas. For instance, if you are looking at northern Ontario, you would likely be looking at a different group of lenders and financial institutions than if you were considering something close to the major areas of Toronto, Hamilton, Ottawa, etc.
Major renovations and teardowns
Perhaps you found a property, but the home needs major work and you are looking at financing the construction. In this volatile market, many financial institutions and lenders are being extra cautious when it comes to financing a construction. It is becoming difficult for them to determine what the true value will be once the renovations or reconstruction is complete. If you are interested in a home that needs considerable work, be sure to reach out or keep your mortgage agent in the loop so they can better assist you. As with all things mortgage related, drawing up the numbers on the type of mortgage, the cost of closing that mortgage, and the interest rate, will enable you to make your decisions confidently and with a high degree of understanding.
Cottages and water access properties
Maybe you have reached a point in your life where you want to purchase a cottage, or even live on a cottage property, so to speak. Typically speaking, cottages with waterfront, even in more remote locations, can be slightly easier to finance. Many times, they are considered easier to resell and more stable than a home in an agricultural zone, for example. Even properties that only have water access are not impossible to finance. It is important to note that an all-season cottage is easier to finance. If you find the perfect cottage but it is not all season, it’s a good idea to consider turning it into an all-season cottage. Even if you are looking to purchase the cottage without intending to use it in the winter, I can help you work through the numbers and find out if it might be worth turning into a four season cottage.
Going mortgage free
Perhaps you are looking into moving out of town and intend to be mortgage free. Understanding how your new property impacts your ability to access equity in the future is always invaluable. You never know when you might need to look at adding a home equity line of credit or mortgage for whatever reason. Do not hesitate to reach out to me if you are looking to be mortgage free with your move but would like to understand your chance of being able to access equity from your property at a future date.