Life Leases

[dplummer]

My wife & I were looking at what we thought was a 1 bedroom condo to purchase for my in laws. Turns out it's a life lease. We can purchase it but can't obtain or attach a mortgage to it. Any thoughts? Thanks!
Doug

 

[Thomas Beyer]

Elaborate please. Leases come in many forms. I live on leased land on UBC, for example. Many leased and parcels with prepaid leases in MetroVan. No problem getting mortgages. How is yours different ?

 

[dplummer]

Thank you Thomas!

Here in Ontario the County owns a nursing home. Attached to the home are apartments. The building is owned by the County. Individual apts can be sold & buyers enter into a life lease with the County. The monthly fee covers all utilities, taxes & common maintenance like a condo however you can't attach a mortgage to the apt unit as the building is owned by the County. It's a cash sale. You can renovate the apt unit And sell it with the County permission.

Hope that sheds some light. Your thoughts greatly appreciated. Doug

 

[Thomas Beyer]

Sounds like a coop. There are some specialty lenders, such as Vancouver's VanCity that lend on coops. That may exist in Ontario too. Ask some other unit owners or credit unions. Another similarity would be mobile homes placed on a mobile home park ( we own a few ) with a monthly pad lease. You can borrow against those too.

The cheapest is likely a line of credit against another asset, like your home, as a lease-attached loan is more like a mobile home chattel mortgage ie higher interest rates, say 6%+ and shorter amortization, say 15 years.

 

[dplummer]

I have never heard of a life lease. I was curious if others have encountered this. I did talk to my bank & credit union. Both declined as they cannot attach to the building. Thanks for you suggestions!
Doug

 

[dplummer]

Oh by the way I did talk to people in the building. All were cash buyers
Doug