Abbotsford and Chilliwack Land Mortgage

If your ideal home isn’t available in Abbotsford and Chilliwack, you might consider building it from scratch. This process begins with purchasing land, and there are specific guidelines and requirements for this in Abbotsford and Chilliwack.

Down Payment Requirements

For standard home purchases, the down payment is typically around 5% of the total cost. However, buying land in Abbotsford and Chilliwack, particularly land that includes essential services like water, electricity, and sewer, generally requires a larger down payment, often between 25-35%.

For partially-serviced land lacking some of these amenities, banks might demand a higher down payment to offset their risk, potentially up to 50%. This means for a land valued at $100,000, you might need to provide $50,000 upfront.

When it comes to purchasing larger tracts of land, ranging from 5 to 160 acres (known as acreage loans), the down payment can vary between 20-35%, depending on whether there’s an existing home on the property or if it’s undeveloped land.

Loan Structuring for Land Purchases

Purchasing land with an existing house or cabin usually falls under a regular home loan. However, buying just the land requires a specific land loan. If your plans include building structures like barns or workshops, separate financing may be necessary.

To start building your dream home, you’ll typically need to clear the land loan with a down payment of 25 to 35%. Lenders need to ensure the land is fully under your ownership before funding the construction. In some cases, lenders may provide a special advance for simultaneously buying the land and building a home.

After completing your home, you can refinance to a regular home loan with potentially better rates. Note that such loans usually don’t cover additional structures like barns, requiring separate financing based on property risk and your credit history.

Additional Loan Requirements

For those buying land to build a home, proving a clean water source is crucial. This might involve drilling a well and conducting lab water tests. Unlike existing homes, ensuring clear property boundaries, access to public roads, and water is also crucial for land purchases.

For assistance with your land purchase and understanding the specific financing requirements in Abbotsford and Chilliwack, consider consulting with a local expert like Jodi Smith at Whalen Mortgages. They can guide you through the process, helping you navigate the financial aspects of buying and developing land in the area.

Consult with a Abbotsford and Chilliwack mortgage broker so that you can find the cheapest land mortgage possible or apply online today.