Want to Buy Rural Property? 7 Things to know before you buy!

Kelly Hudson • June 11, 2024

Living in the country has a lot of appeal for many people. Imagine waking up to the sound of birds instead of traffic, having a big yard to play in, and enjoying the peace and quiet that city life often lacks. A country home offers ample space, a place to raise your family, and the beauty of nature right at your doorstep. 


However, buying a rural home can be quite different from purchasing a home in the city, especially when it comes to getting a mortgage. Let’s explore some important things to consider before making the move to the countryside.


Understanding Mortgage Risks

When lenders look at your mortgage application, they are primarily concerned about managing risk. Higher risk means higher interest rates. The main risk for lenders is whether you'll repay the loan as agreed. If you don’t, they might have to take your home and sell it to get their money back.

  • Foreclosure Hassles: Lenders do not want to own your property. 
  • Foreclosing on a home is a long and complicated process that involves evicting the current owners, listing the property for sale, and waiting for it to sell. 
  • This process can take months & months, especially in rural areas.
  • Rural Property Challenges: Selling a rural home can be more difficult compared to an urban one. 
  • The demand for homes in the country is usually lower, meaning it could take longer to find a buyer.


To reduce their risk, lenders have special rules for rural properties.


What Counts as a Rural Property?


In Canada, a rural property is typically defined as land located outside urban areas, characterized by low population density, primarily used for agriculture, forestry, or natural resource activities, and often lacking extensive infrastructure.


7 Key Considerations Before Buying a Country Home:


1. Zoning Matters

Many lenders are hesitant to mortgage properties zoned as agricultural. Why? It’s all about risk again.

  • Foreclosure on Farms: Foreclosing on a farm means taking away a farmer's livelihood, which involves complex legal hurdles designed to protect farmers.
  • Non-Farming Uses: If you’re not planning to farm, financing a rural home can be similar to financing an urban home.


2. Water and Septic Systems

In the country, you need to manage your own water and sewer systems.

  • Water Tests: If your water comes from a well, lenders might require a potability and flow test to ensure the water is drinkable.
  • Septic Systems: Check the septic system with a qualified inspector. Make sure the seller guarantees that the system is in good working order until closing. Repairs can be costly, so include these checks in your buying conditions.


3. Land and Appraisal

Lenders when looking at the value of your property typically consider the house, one garage (outbuilding), and up to 10 acres of land.

  • Appraisal Costs: Rural property appraisals can be more expensive because the appraiser has to travel further. The appraised value might also be lower than expected since rural properties don’t sell as quickly as city homes.
  • Covering the Difference: If you love the property, be prepared to pay the difference between the selling price and the appraised value.


4. Wood Energy Technology Transfer (WETT)

If the house has a wood stove or fireplace, consider making your offer conditional on a satisfactory WETT inspection. This ensures the wood-burning unit is safe and properly installed.


5. Title Insurance

Rural lands, especially larger or remote ones, may have been used for dumping toxic chemicals.

  • Check the Title: Investigate the property’s title for any history of hazardous waste. Title insurance can protect you from potential issues.
  • Insurance Requirements: Your insurance company might require title insurance before issuing a policy.


6. House Insurance and Fire Safety

  • Lenders require insurance to protect their investment. 
  • Getting home insurance in the country can be tricky and expensive due to the distance from fire hydrants and stations. 
  • If you can't get insurance, it might delay or prevent your mortgage from closing.


7. Work with a Realtor Who Knows about Rural Properties

  • Hire a real estate agent knowledgeable about rural properties and local zoning laws. 
  • Zones and the related details are determined by each local government so there may be variation between communities throughout each province.

The Bottom Line

Buying a rural home involves unique challenges, especially when it comes to securing a mortgage. Before you make an offer, have a detailed discussion with your real estate agent, mortgage broker, and lawyer to understand all aspects involved. Mortgages can be complex, but with the right guidance, you can find a solution that works for you.


Need Help? 

If you're considering a move to the country and need expert advice on mortgages, don’t hesitate to reach out. 


Let’s discuss a mortgage that works for you, not the bank!


Kelly Hudson
Mortgage Expert
Cell: 604-312-5009
Kelly@KellyHudsonMortgages.com
www.KellyHudsonMortgages.com

Kelly Hudson
MORTGAGE ARCHITECTS
RECENT POSTS 

Buying Bare Land in Canada: What You Need to Know

By Kelli Hudson • May 16, 2025
Have you ever dreamed of buying a piece of land and building your very own home from scratch? You're not alone! Buying bare land, especially in beautiful British Columbia, Canada, can be an exciting adventure or a money pit. Before you start dreaming of where to put your future house, there are a few important things you should know. What is Bare Land? Bare land, sometimes called vacant land, is just that—land without any buildings or structures on it. It's an empty canvas waiting for your ideas. But buying bare land isn’t quite the same as buying a house or apartment. It comes with its own set of rules and challenges, especially when it comes to financing. Why is Financing Bare Land Different? When you buy a home, Lenders feel safer lending you money because if something goes wrong, they can sell the house to get their money back. With bare land, it’s different because there’s nothing built yet. It’s harder to sell bare land – than a home. Which makes it riskier for Lenders, therefore they usually have stricter lending rules and higher interest rates to offset the risk. Important Things to Consider About Financing Bare Land: 1. Down Payments Can Be High Raw Land : This is completely untouched land without any utilities like water, sewer, electricity, or roads. Lenders often require a large down payment, sometimes around 50% of the land’s price. Due to the higher perceived risk, many lenders do not lend on raw, undeveloped land. Vacant or Serviced Land : This land already has important utilities (like electricity, water, sewer, gas, telecommunications, and road access) nearby or already installed. Because it's easier to build on, Lenders may require a slightly lower down payment, usually around 35%. 2. Higher Interest Rates and Shorter Loan Terms Interest rates on land loans are generally higher than on regular home loans because of the increased risk. Also, Lenders might offer shorter loan terms. Some lenders may offer loans where you only pay interest for a few years, which can help lower your monthly payments in the short term. 3. Finding the Right Lender There are three main places to get a land loan: Traditional Banks : Major banks sometimes provide land loans but usually with strict rules, high down payments, and higher interest rates. Credit Unions : Local credit unions can often have more flexible rules and may offer better terms, especially if the land is within their local lending area. Private Lenders : Companies specifically dealing with land financing. They offer customized loans but typically charge fees for borrowing the money and higher interest rates.

Buying vs. Renting in Canada: Which Makes Financial Sense for You?

By Kelly Hudson • April 3, 2025
Are you debating whether it's smarter to rent or buy a home in Canada? It's a common question, and the answer depends on your personal situation. Both renting and buying have their pros and cons, but for most people, homeownership tends to offer substantial long-term benefits. Let’s explore both options clearly, so you can confidently decide what’s best for you. Advantages of Buying a Home 1. Personal Freedom and Customization Owning your home means having the freedom to personalize your living space. Dreaming of a bold paint colour or unique flooring? Go ahead—your home, your rules! 2. Building Equity and Wealth Each mortgage payment you make is an investment in yourself. Over time, your home typically appreciates in value, increasing your equity. This can become a significant asset that helps secure your financial future. 3. Stability and Security Owning offers peace of mind. You don’t need to worry about sudden rent hikes or eviction notices. Your home remains yours until you decide otherwise. 4. Long-Term Financial Benefits Homeownership acts as forced savings. Unlike renting, every mortgage payment moves you closer to outright ownership, building a financial foundation that can support you and your family for years to come. Challenges of Buying a Home 1. Upfront Costs Buying comes with significant initial costs, including a down payment, legal fees, home inspection, appraisal, moving expenses, etc. 2. Responsibility for Maintenance Owning a home means you're responsible for maintenance and repairs. This can sometimes be costly and inconvenient. 3. Reduced Flexibility Selling a home typically takes time, which can limit your flexibility if you need or want to relocate quickly. Advantages of Renting 1. Easy Mobility Renting offers flexibility to relocate easily, beneficial for frequent job changes or lifestyle adjustments. 2. Fewer Responsibilities Repairs and maintenance are generally your landlord’s responsibility, reducing stress and unexpected expenses. 3. Lower Initial Costs Renting typically requires just a security deposit and the first month's rent, making it easier financially at the start. Downsides of Renting  1. No Equity Building Rent payments do not contribute to your equity. Instead, you’re effectively paying your landlord’s mortgage, offering no long-term financial return. 2. Restrictions and Rules Landlords often impose limitations, such as no pets or restrictions on decorating, making it challenging to feel fully at home. 3. Instability and Uncertainty Renters may face sudden rent increases or eviction if the landlord decides to sell or repurpose the property, disrupting your life significantly.