Owner-financed properties for sale
Owner financing may be offered in different ways but the objective to transfer ownership of the property to another person. Some owners may offer favourable terms that resemble bank mortgages. Others may prefer a lease-option that gives you a chance to build equity in the form of higher than market rent. Sellers will generally ask for the same qualifications as a bank but some may be flexible if the property is unique or difficult to sell.
Some properties are difficult to obtain financing for because they have alternate ownership rights or represent a risk to the lender. For example, cottages on leased land do not qualify for a mortgage because the lender has limited recourse in the event of default. Co-operatives require a 50% down payment for lenders to consider a mortgage. Few people have a large down payment and this may put pressure on an owner to consider some form of a first or second mortgage.
Banks generally like to see complete, functional homes that can be resold easily. Buildings with missing fixtures, permit issues, or simply overbuilt homes present challenges for the seller. By offering financing, the seller makes it easier to sell.
Mobile homes can be difficult to finance because they are a hybrid structure. Without the appreciation from land, the dwelling itself becomes a depreciating asset. A mobile home may be eligible for financing similar to a car or RV but 25-year loans usually require that the land is owned.
Questions about properties with owner financing? Contact us today for more information.