With all of the upcoming and current new condo developments happening in Halifax, we thought it would be prudent to have Igor Geshelin, our trusted Mortgage Market Professional partner with The Bentley Group at Premiere Mortgage Centre, offer some insight on financing a new condo purchase. Here is what Igor had to say:
Buying into a new construction condo project can be a very exciting opportunity to take advantage of if you don’t accidentally ruin it for yourself. Here is what I mean:
You are buying a pre-construction, or under construction condo… pretty exciting stuff! Between picking out the backsplash and keeping an eye on the constantly changing closing date, one important detail can fall through the cracks: the financing.
When you put together your purchase agreement, you have to meet a financing approval clause, same as if you were buying a regular, already existing and move in ready home. The difference of course is the timeline – instead of closing in 1-3 months, you are looking at 1-3 years. A common misconception is that once you are approved for your mortgage today, that approval is binding through to closing, which is NOT the case as you have to re-qualify if a significant period of time passes before your actual closing date. This means that the mortgage approval that you receive today is essentially worthless in 2 years when you finally close on your new downtown loft.
Why is this important? When it comes time to closing, the lender will have to re-approve you based on market conditions at that time. But the potential issue is much more important than a change in interest rates. If you had made any material changes to your personal financial picture while waiting for your condo to close, you may no longer qualify for a mortgage. This means you wouldn’t get to actually close on your condo; you would lose your deposit and potentially face legal action. If you are under contract to buy a condo that doesn’t fully exist yet, and you decide to change jobs, become self-employed, buy a new car, get an investment loan, max out your credit cards, get married, get divorced, etc., you MUST first talk to your mortgage provider to ensure that you don’t shoot yourself in the foot and end up homeless by virtue of one of these decisions causing you to no longer meet the mortgage qualification criteria.
This is an important consideration when buying any property, but becomes a much more prevalent concern when the timeline between purchasing a property and actually closing on it is quite lengthy as is the case with a new construction project. Many life events can certainly fit into that window of time, and some of them may negatively impact your ability to borrow money.
Purchasing a new construction condo is exciting and has many benefits. By no means is this article saying that you must put your life on hold while you are in this process – just make sure you consult with your mortgage professional before making any decisions.
To learn more about financing strategies for your condo purchase, or any other mortgage questions for that matter, give Igor a call (902-441-6493) or shoot him an email (firstname.lastname@example.org), he is always happy to help.
Sometimes you may walk away from a condo that needs some renovations because you are already spending your hard earned savings on the down payment and closing costs. To help you avoid losing out on a property for this reason, here is an article from Igor Geshelin: one of our trusted partners as a Mortgage Market Professional with The Bentley Group at Premiere Mortgage Centre. The Bentley Group is Premiere’s top producing Team in Atlantic Canada, and Premiere has recently had the distinct honour of being awarded “Mortgage Brokerage of the Year” at the CMP Canadian Mortgage Awards. Here is what Igor has to say:
You’ve found the perfect condo. The location is ideal, the price is in your budget, the layout is perfect and it’s just the right amount of square feet for you and your favorite things. But the kitchen cabinets look like someone made them out of a station wagon’s wood grain panels, and your feet are submerged ankle deep in a sea of what you sincerely hope is carpet.
Updating these items to modern day standards is going to set you back a few thousand dollars, and as you are about to purchase a property, the last thing that you need is another expense on top of your down payment, 1.5% Deed Transfer Tax (some may call it a government money grab), solicitor fees, etc. Not to worry, there is a mortgage product just for you: Purchase Plus Improvements is here to save the day.
Designed specifically for scenarios where some renovations are required to be completed to a property at the time of purchase, this program simply requires up front quotes for the intended work to be submitted for lender approval at the time of securing your mortgage for the purchase. The renovation funds are held in trust until the work is complete, and then released directly to you to pay the contractors, or reimburse yourself if you have already paid for the work out of pocket in the meantime.
This is a spectacular way of including value-add property improvements directly into the mortgage, and especially at today’s historically low rates this is by far the lowest-cost approach to financing a renovation project. If you were to wait a year after purchasing and pay for these items on your credit card or a line of credit, your cost would be substantially higher. To put it in perspective, adding an extra $10,000 worth of improvements to your mortgage today would only be an additional $21/month. It doesn’t’ get much better than that, and your kitchen will be transformed into an Ikea showroom in no time!
If you have any questions about Purchase Plus Improvements, or any other mortgage questions for that matter, don’t hesitate to contact Igor at email@example.com or call: 902-441-6493.
As always if you are looking to buy or sell a condo feel free to contact us.
We are pleased to share with you a guest poster to the condo company blog. Scott Walker is a mortgage consultant with HLC(Home Loans Canada) and one of our trusted partners. He is a seasoned industry professional with 20 years experience. He brings a wealth of knowledge and perspective into the HRM real estate and condo markets. Check back regularly for Scotts comments. Thanks Scott and we look forward to more posts in the future. AP
Some thoughts on the Economic, CMHC Housing Market Outlook, First Quarter 2013
– Nationally it looks like we have avoided any real crises with regard to housing decrease. It would appear this was the result of a well-managed easing of Mortgage Amortization Schedules from 40 years back to the traditional 25 years by the federal Government.
– Atlantic Canada as a whole will remain below 2% GDP growth in 2013 and 2014 as a result of only moderate employment growth and a reduction in spending and investment activity by both the public and private sectors.
– Nova Scotia will have the best Economic performance in Atlantic Canada, 1.4% in 2013 and 1.7% in 2014. The province will see meaningful improvements in employment of close to 1%. This is better than last year, which saw an improvement as well. The difference this year is employment growth will be focused mainly on full-time employment. This is as a result of the last few years and a focus on opportunities tied to resource development.
– Halifax is showing what can only be described as a very well balance unemployment rate of 6.4%. If my memory serves me correctly from Economics class 6% is the optimal for an economy. This leaves just enough people looking for work to help with growing Business on a sustainable leave.
Need good sound advice on mortgages, Scott can be easily reached by email firstname.lastname@example.org
As always if you are looking to buy or sell a condo we can be contacted at email@example.com