There are two new realities for those who have bought are or thinking of buying condos in Liberty Village: There are a lot more condos in Liberty Village than there used to be and financing a condo purchase is a lot harder than it has been in recent years.
The first reality is pretty obvious and is contributing to the 2nd reality. Banks have become a lot more restrictive than they have been in recent years when approving financing for real estate purchases. In particular, banks are making life much more difficult for those who have bought condos and even more difficult for those who have bought small (under 500sqft) condos or those who have “purchased” assignments.
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For those who do not know, Assignments occur when a purchaser buys a condo from the developer and then attempts to assign his/her Agreement of Purchase and Sale to a new purchaser ahead of the final closing, usually at a profit.
We are fielding a number of calls recently from people who have bought in Liberty Village who are having trouble getting a mortgage approval in light of these fairly recent changes. We decided to turn it over to a pro named James Harrison (mortgages.ca), a mortgage broker with Dominion Lending, who gave us some insight into what is happening and what can be done:
With all of these condos coming on the Market in the next 2 years the main fear and reality people are finding 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). There fore, 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 big 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 if going through a situation like this, please contact Mortgages.ca and one of our Mortgage Professionals will take care of you or at least educate you on all of your options.
James Harrison, AMP, Mortgage Professional, O: 877-245-1185 x101, [email protected]
We encourage you to speak with James if you are running into this problem and should you require help in selling your Liberty Village condo, Heikki Walden and I are your Liberty Village real estate team with hundreds of successful sales in Liberty Village and the surrounding areas. E-mail us at [email protected] or call us at 416-520-0779.