Did you know some lenders will finance 95% of a leasehold property?
Most of the big 5 banks require a minimum down-payment of 20%, but there are still a few wholesale lenders willing to arrange financing with a down-payment of 5%.
A couple things to note about these lending scenarios are:
- There must be adequate time left on the lease, for example: A 25-year amortization requires a minimum of 30 years left on the lease.
- The mortgage needs to be insured
- Leases must be Provincial, Municipal, SFU or UBC
Also, when advising your clients on the purchase of a leasehold property its worth thinking about their age, financial situation and their plan for the property.
A growing number of elderly homeowners are relying on their house as a form of “retirement savings account” by taking advantage of “reverse-mortgage” products.
A Reverse mortgage product allows elderly-homeowners to supplement their income by withdrawing the equity built up in their property in either a lump-sum payment, or monthly allowance.
A lease-hold property is NOT ELIGIBLE for a Reverse-mortgage if there is less than 75 years remaining on the head lease, or if it’s located on First-nations land.
If you would like more information on regarding financing leasehold properties, please send me a message.
Thanks for reading!