You have found the perfect home, but the lenders and/or the mortgage insurers, advise your mortgage associate, Elise Hildebrandt, AMP, they can’t approve financing as the home doesn’t fit their guidelines. Really? What does this mean?
Residential Homes, Leisure Homes, and Cottages
Residential Homes: This is your primary home found in the suburbs, or rural area, it’s the 2nd home, so that your kids can go to University or the condo you need in Victoria to get away from it all.
- This property is zoned as Residential, Country Residential, Rural or Acreage.
- The mortgage insurers don’t have a minimum sq footage requirement, anything less than 500 sq ft will be reviewed carefully. Each lender has its own minimum requirement, as size is a factor as lenders and insurers need to know a unit can resell quickly in the event of default.
- The property must have at least one bedroom, a bathroom, and a kitchen.
- What is the construction of the home? If its older, has it had any upgrades? The property must be structurally sound and in good repair. A MLS that says awesome fixer upper or handyman’s special, will make the mortgage insurer and lender hesitate.
- It must have heating, potable water and be hooked up to a sanitary sewer or septic system.
- It must have year round access on a maintained public road.
- It must have good market appeal, be within the price range for the area and no adverse influences/or neighborhood nuisances — ie a shipping compound across the street, or an industry manufacturing area.
Leisure Homes: (Known as a Vacation A Property to the mortgage insurers): Is similar to your residential home; however, depending on the lender the value of docks, boathouses, and bunkies may be included in the property value.
- This property can’t be rented.
- Leisure homes are known as vacation A because of where they are located.
Cottages: (Known as a Vacation B Property to the mortgage insurer):
- Must have minimum of a kitchen, 3 piece bathroom, and bedroom
- ”Seasonal access only” is acceptable (i.e. road is not plowed or only accessible by boat)
- No permanent heat source required (i.e. wood stove, fireplace, stove or heat blower)
- Water source need not be potable.
- Indoor plumbing can be chemical, portable or a holding tank
- Foundation may be floating if normal for area (i.e. sitting on blocks)
On all Cottage/Vacation B property’s the mortgage insurer will order an appraisal and you must have 10% for the down payment.
Remember, that a property valuation is not a fixed or permanent number. It is simply a snapshot of what your home is worth today, in relation to current market conditions and what other, similar properties are selling for. This value can change over time based on improvements to the property, as well as changes in your neighbourhood and the overall housing market.