Using the Equity in Your Home to Purchase Other Properties

What do Bob & Kathy of Calgary and John & Betty from Ottawa both have in common? They both happened to contact my office this past week and they both were trying to figure out mortgage options to finance the purchase of a vacant parcel of land somewhere 3 or 4 hours west of their home cities. For now, the plan was to use the place as a weekend and summer getaway and God knows they could use a getaway in this crazy Covid-ridden world! Down the road, each couple will eventually build a retirement home or cottage.

In this blog, I provide a refresher on the down payment (equity) requirements for residential mortgages. It is a very common question and the answer depends on many factors. It depends on the property type (house/condo, acreage, vacant lot, farm etc.), who’s going to live in or on the property, how you earn income, and your credit rating. It also depends on whether you are looking for purchase financing or to replace/renew an existing mortgage. In this article, I am going to try and simplify the various ‘lending rule books’ for you in only 600 words!