Beware as Lenders Tighten on Condo Mortgages Toronto

We have seen that Condo buyers are facing stricter lending guidelines, dropping values (especially for in-construction buildings) and, if they're self-employed or buying for investment purposes, new rules and restrictions.

In fact, situations where people who bought suites two years ago and thought they had a big enough mortgage to cover 75 per cent of the price are now being told 65 per cent is all their lender will put up.

New condo buildings can go down in value due to builders cutting back on extras and upgrades to increase affordability, says a Globe and Mail reporter.

Along with dropping values, self-employed condo buyers in particular have to show higher credit scores (in the 680 range, up from 620).

In addition, real estate investors face more restrictions - for example, lenders can only count 50 per cent of rental income toward revenue needed to qualify for a loan when it used to be 80 per cent.

Make sure you know your facts and that you consult a real mortgage professional (accredited and licensed) who will make your buying or refinancing experience pain-free, stress-free and enjoyable. With over 50 lenders available in Canada, there are simple and easy way to make sure you get the right mortgage tool to get you where you want to be.

Danny D. Kellman, MBA, AMP, EPC [ddkellman@mortgages4women.ca] is a principal with

The Mortgage Diversity Group Their blog is Mortgages 4 Women, Toronto, Ontario. Danny Kellman and Marcy Berg concentrate their efforts on bring information and knowledge to the growing base of women only mortgage business. Danny can be contacted at 300 - 40 Wynford Dr., Toronto, ON, M3C 1J5

Phone: 647-929-5346 Toll-free: 1-888-372-7367 ddkellman@mortgages4women.ca

Shopping for a used condo in west Toronto

While out showing properties this month, I have been focused on working with an investor; who is viewing the condo market with great opportunity.

Instead of evaluating the condo's on their sales literature and proposed amenities his evaluations are very pragmatic based on the square footage, maintenance costs and historic sales values as compared to square footage and the cash flow available from rentals.

In the process of our analysis we can across a wonderfully improved three bedroom condo unit in Mississauga. Although the maintenance costs were higher, (twenty year old building) the lack of amenities outweighed the fees associated with ownership when one compared the square footage of almost 1600 square feet compared to the new condo's averaging 760 to 880 square feet.

As a pure rental the 1600 square foot three bedroom unit would appeal to a greater tenant pool.

This particular unit was owned by a younger fellow who was an electrician by trade. During the course of his ownership he had altered (renovated) some walls to become knee walls (half height) making the unit more spacious and visually pleasing. The ceilings had their stipple finished removed and reapplied when he had improved the ceiling with a line of in ceiling POT LIGHTING. The work was very well done and first rate in its finish and appearance.

The issue that comes light (if you pardon the pun) is that this owner has improved his unit without permission of the condominium board of Directors. I am not suggesting that the Board would approve or decline the changes but the material fact in this circumstance is that the owner is changing features to the common elements of the building. His drilling and installing ceiling based pot lighting is in his ceiling but in someone else's in floor heating.

Although I am confidant that all the work was done to code; in strict adherence to safety issues and concerns about the in ceiling heating and wiring, once sold this benefit becomes someone else's liability.

Condominium Ownership has many advantages for the owners but also carries the responsibilty of following the Rules and Regulations of the Condo Board.

If you are considering a condo purchase I urge you to investige the existing condominium market along the Humber Bay Shore for some good values compared to shopping new.

Financial Insecurity may slow Toronto Condo Construction

Some condominium developers in Toronto are starting to feel the effects of the global credit crunch, and analysts say that could put some projects in jeopardy.

A condo market analyst says 30 per cent of the 120 projects currently being marketed in Toronto are teetering because they can't get financing.

Projects already being built don't appear to be in any danger of grinding to a halt, said Jane Renwick, executive vice president of Urbanation, a condo consulting firm.

But Renwick is concerned about smaller projects that haven't reached the construction phase.
The "A" locations — the ones downtown, or near subway lines and being built by proven developers — aren't affected. It's the "B" locations being presold by unproven developers that are causing concern.

"The Tridels, the Menkes of the world, they will have no problem. They've got good, established relationships with the banking community. It's the marginal players, the new kids on the block, those are the ones that we're worried about and that could represent up to 30 per cent of the projects that are not under construction," said Renwick.

Mike Labbé, who runs Options for Homes, a non-profit company that develops condos and townhouses for people on low incomes, has heard from other developers that it's taking longer than ever to line up financing.

"It's getting tighter. It's getting harder to find. People are having to be more creative. They're having to come up with more of their own equity to make it happen," says Labbé.
To raise equity, Labbé says, some developers are even selling off land they were holding for future projects.

For construction workers like electrician Tony Pacheco, it's a worrying scenario.
"It's scary," said Pacheco, "but at this site here, we have lots of work."

Renwick says that if the situation continues, "we're going to have disappointed buyers.
"They are going to get their money back, they will get their deposit plus one per cent according to their purchase agreement. They'll be protected, but disappointed."

David Pylyp; While I do agree that the new projects may be difficult to sell in a changing economic environment, A) the Buyers have many choices to pick from, B)Their deposits are protected, C) if the project does not achieve critical mass their deposits are refunded or they may choose to re-invest in the new revised projects. A simple example of this was the High Park Lofts in Roncesvalles Village that was sold 3 times, thru 3 different developers until it achieved critical mass and was finally constructed. (site drawings, ceiling heights and floorplans were redrawn and revised)

There will be many more that are sold and resold prior to construction. It cannot be stressed enough, the cranes that you see going up on different sites around the west end of Toronto and along Humber Bay Shores, are building that have sold at least 75 to 80% of the proposed units, and THEN commenced construction.

Nevis Condominium 80 - 88 Palace Pier Court

Etobicoke Condo Waterfront Humber Bay Shore

88 Palace Pier Court

FEATURES:

Located on the south west corner of Palace Pier Court and Lakeshore Blvd. West. A 16 storey, 130 unit building and a 6 storey, 29 unit building of terrace suites.

PRICE RANGE OF SUITES:

One bedroom $190,000 to buy
Two bedroom $250,000 - $520,000
Terrace Suites from 1,400 to 1,705 sq. ft up to $600,000 - $700,000

AMENITIES:

Buildings share 24-hour concierge, putting green, Fitness centre, lounge with kitchen, billiards rooms and TV room. Underground parking garage with car wash

80 Palace Pier Court

Located at the south west corner of Palace Pier Court and the waterfront. a 5 storey building with fewer amenities but a much better waterfront.

PRICE RANGE OF SUITES:

One bedroom $275,000
Two bedroom $340,000 - $550,000
Three Bedroom $650,000

Pictures and Sold information updated May 08.

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