If your borrower owns, or wishes to purchase property that is zoned our used for agriculture, there still may be some mortgage options for them with MIC’s and private lenders.
Legally speaking there is no difference in the security a lender takes over agricultural land over regular residential land. The challenge is in the layers of farm protection legislation that has been enacted both federally and provincially. Without going into the specifics of each, the effect is that it is much more difficult to foreclose on agricultural properties, so many lenders avoid them.
Here are a couple of points that may make a difference to your lender:
- Does the borrower earn their income from farming the property or is their income from a traditional job and they just happen to want to live on a large parcel of land?
- Is the property zoned agricultural but not being farmed?
- Is the property being farmed but not zoned agricultural?
- Are there livestock or other animals involved?
If the lender can see a clear path to an exit if the mortgage goes into a foreclosure, the deal may get traction with some lenders. Having answers to the above questions will help craft the narrative for the file.