Hobby Farm Mortgages in Ontario.
What is a Hobby Farm?
The primary difference between a hobby farm and a working farm is that a hobby farm is operated for pleasure as opposed to generating income from the lands and farming. An owner of a hobby farm typically derives their income from an unrelated career, or pension or investment income. Also, the owners of a hobby farm aren’t relying nor depending on the revenue of the farm. A typical hobby farm might consist of a house, barn, outbuildings, and animal stables and cages.
Do Banks Finance Hobby Farms?
We are often contacted to assist clients with sourcing financing for hobby farms due to traditional lenders’ lack of interest in approving their loan applications. The usual reasons for a bank mortgage decline consist of any combination of the sheer fact that the property is operating a hobby farm, the property zoning, the acreage, and the rurality of the property.
How Do Lenders Underwrite Hobby Farm Mortgages?
If you are seeking mortgage financing to purchase or refinance a hobby farm, your mortgage lender will want to ascertain the following information:
- The property location
- The property zoning
- The property value
- A description of the property and lands
- Is the property generating revenue
- The type and number of animals
- The existing mortgage balances
- The amount and purpose of funds requested
- Your income and credit profile
A typical rule of thumb with acreage exists in the mortgage industry. Lenders will only use a hypothetical value of the house and 5-10 acres less any contributory value from the outbuildings and additional acreage. As a result, this often places clients at a disadvantage when the property consists of multiple structures and vast acreage.
Hobby Farm Mortgage Solutions
Not only are the mortgages that we provide to owners of hobby farms fast and flexible, but also very creative. Custom term lengths, fully open mortgages, amortized, and interest-only payments exist. Furthermore, you might receive approval for a hobby farm mortgage using the value of the house, outbuildings, and the additional acreage. Using the value of the entire property will contribute considerable assistance to your financing requirement.
Contact us at any time if you would like to have a friendly conversation about hobby farm mortgages in Ontario.