Small Condos and Assignments
With all of these condos coming on the Market in the next 2years. The main fear and reality people are finding out is that financing for small units (under 500 square feet) is extremely tough to find.
Most of the Big banks and lenders now will NOT finance any units under 500 square feet. This is a serious concern.
Another great concern is the units that have been sold on Assignment. A lot of people have been selling their units on assignment because either they could not close on them themselves or they saw the opportunity to make a quick buck. The harsh reality of these assignments of purchase is pretty well all lenders will not approve the NEW (assigned) purchase price of that assignment. Meaning, the original purchase price was $300,000 say 2 years ago, and now that client is selling this same unit today on assignment for $400,000. Most lenders will only finance the original purchase price (i.e.: $300,000). Therefore, this person who bought on assignment would have to come up with a down payment of the $300,000 purchase PLUS they would have to come up with $100,000 cash to the seller for the difference.
As you can imagine both of these situations could be a very scary experience for most realistic buyers out there today. Not to fear too much, because if you have a GOOD mortgage broker with exceptional relationships with the few lenders still approving these types of purchases you have nothing to fear…at least for now.
“If you go into your local branch or talk to a banks mortgage specialist, there is a VERY high chance that bank will say no. They will either say: “The square footage of that unit is too small”. Or they will say, “We can only finance your new purchase based on the original purchase price and not the new assignment purchase price”.
If you or anyone you know is going through a situation like this, please contact mortgages.ca. One of our Mortgage Professionals will take care of you or at least educate you on all of your options.
Contact Info:
James Harrison, AMP
Mortgage Professional
O: 877-245-1185 x101
C: 647-822-2767