Purchasing a Mobile or Modular home on leased land is different from purchasing a detached home. These homes are registered at a registry office as opposed to a land titles office since the ownership of the land is not changing.
There is a little more paperwork that is required when you are leasing the land that the home is on. For your basic leased land mortgage, the paperwork that most banks would require to finish the purchase would be:
– Current income letter and most recent pay stub
– 3 month savings history of down payment – Minimum 5% of purchase value.
– Copy of the site/lease agreement. Each bank would have their own requirements what this is to include. I will go into more detail further down.
– Copy of the site map outlining the location of the building
– Copy of the Offer to Purchase and MLS (if available)
That is the basic paper documentation that is required for the purchase. This may vary depending on your lender and the mortgage insurance company.
For the most part site/land lease agreements are OK in your established leased land areas, so you usually do not run into an issue with these. There is somethings that some banks will look for in the lease agreement. This includes:
– The lease must be assignable to the bank or future purchasers.
– Must be signed by the landlord
– No restrictions to the bank to access the unit if needed
– No restrictions or limitations to the re-sale of the unit (purchase price, or type of purchaser)
– Not negotiable at the landlord’s request before expiry of the term.
There are some things to keep in mind when purchasing a Mobile or Modular Home. Some thing are a little diffrent than purchasing a detached home.
– Mortgage Insurance is required no matter what the Loan to Value is.
– Interest rates are at the posted rate.
– 100% of the site/land lease payments must be included in both the TDS and GDS.
– These Mortgages are not Assumable or Assignable.
– 25 year maximum amortization on new homes
– Site tenant, Purchaser, and Mortgage Borrower must be one and the same
– Maximum amortization is not to exceed the remaining economic life as determined by the insurer.
I hope this helps you get prepared for your home purchase. If you have any questions please email me anytime at firstname.lastname@example.org
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Thank you for reading
Scott Bourke, AMP
Regional Mortgage Corporation