It’s a trend that started in recent years and was strengthened by the pandemic: more and more people are exchanging the dream of owning prime real estate in the city and instead are buying further afield, in the suburbs, the countryside or in smaller towns. After all, when you’re working from home anyway, why not opt for more space at a more affordable price? There’s also the appeal of going back to the land, growing your own food and maybe even raising a cow or a pony or some chickens. However, buying in the country is not as straightforward as it seems. Different rules apply for rural property. So, here are a few things first-time homebuyers should consider before buying property outside the city.
Zoning bylaws cover how you may use the land. For example, they describe how many buildings you may put up, where you may construct these buildings and what you may use the property for. If the property is zones country residential, there may be restrictions on whether or not you may sell the veggies you’re growing, for instance. Zoning can also affect how you’ll be able to finance your purchase, since some lenders may avoid financing properties that are zoned agricultural or country residential.
How to Finance the Purchase
One of the most important steps in how to buy a home is figuring out how you’ll pay for it. For the first-time home buyer, Canada offers several programs that can help you, such as the Canada Mortgage and Housing Corporation’s First-Time Home Buyer Incentive or the federal government’s Home Buyer’s Plan. For the first time home buyer in Ontario, the rules may differ slightly from those in other provinces and territories, so it’s best to find out what the rules are in your area.
The Down Payment
To get a mortgage, you need to be able to make a down payment first. Programs like the Canada Mortgage and Housing Corporation’s First-Time Home Buyer Incentive require a down payment of 5% of the lending value but are generally only for residential properties on no more than 10 acres. If the property is larger than that, your mortgage lender may require a bigger down payment.
Moving out of the city doesn’t have to mean giving up your creature comforts to go live in a drafty farmhouse instead. With some clever renovations, you can turn that farmhouse into the home of your dreams. For first-time buyers, it may be tempting to buy a cheap home described by the realtor as “a fixer-upper” or “in need of some TLC” but you need to consider the cost of renovations, which can be much higher in rural areas due to the cost of transporting the materials.
Even if you want to stay on-grid, it’s worth remembering that rural homes more often than not have off-the-grid water supply systems. Your mortgage lender will require a recent water potability certificate, which means you first need an inspection of your water source. If that source is contaminated, you may have to have a new well drilled, which can cost you several thousand dollars
Whether it’s a farmhouse or a cottage, there’s a good chance that wastewater goes into a septic tank. After all, you don’t want to contaminate that lovely lake or stream that makes the property so appealing, do you? Your mortgage lender will most probably ask you to present a septic certificate, which you can only get after an inspection of the septic system. This can cost more than it does in the city.
If you’re going to be working from home, you’ll need reliable electricity, telephone lines and internet. This can be harder to find in rural areas and when the lines are down, they may also take longer to repair. Moreover, utilities tend to be more expensive in the countryside so you’ll need to find clever ways to save on your hydro bill.
Another piece of paperwork your mortgage lender will want to see is an appraisal of the property, which basically says how much the land is worth. Getting an appraisal done generally costs more than in the city because the appraiser has to travel so much further. The final appraisal may also be lower than you’d expect because it’s harder to sell rural properties. So, you may need to have to cover the difference between the appraised value and the selling price.
It may sound very romantic to have a property so remote that you can only access it by boat or an ATV. That will quickly get old in winter, though. Speaking of winter: just how much driveway are you prepared to shovel? One of the things to know before you buy a piece of land is that in rural areas, neighbours often share a private access road and are responsible for its upkeep.
Home insurance tends to be more expensive in rural areas. One of the main reasons for this is the increased risk of wildfires. It’s also worth remembering that you’ll be further away from emergency services, so you’ll need a good home emergency plan that not only deals with how to evacuate your home but also with how to put out fires and apply first aid for more serious medical emergencies.
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