<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=294326554740919&ev=PageView&noscript=1" /> Mortgage Warning - Wilson Sisters

Mortgage Warning

18 November 2013
Wilson Sisters

Have you purchased a new condo or house during that last few years and are awaiting its completion? We strongly suggest that you get in contact with your lender to be sure that your financing is still in order. Do this sooner rather than later, especially if you’re buying the property as an investment and plan to rent it out instead of living there. Yet again, mortgage lending rules tightened up earlier this year, and many people don’t realize that it’s now much more difficult than before to secure financing for rental properties. Four out of five lenders will no longer advance an 80% mortgage on a rental property, particularly on condo apartments, now only advancing mortgages between 65-75% of the property’s value. Sometimes lenders will also ask for an interest rate premium on rental properties, but if a buyer is facing the prospect of not qualifying at all, paying a higher interest rate can be a best case scenario. Buyers of newly constructed properties usually have very large deposits on the line that they stand to lose should they not be able to close, so securing a mortgage should be a top priority.

Another thing to consider is that lenders will no longer issue “equity mortgages”. An equity mortgage was issued in the past when the buyer had large amounts of cashable assets but little monthly income. New mortgage regulations insist that all lenders need to clearly document the ability of the borrower to service monthly obligations with their monthly income.

Should you find yourself facing difficulty finding a mortgage for your new property, please contact us. We work with mortgage brokers whom we trust implicitly and who know how to handle these situations. Having a good team behind you is imperative. You don’t want to be facing the stress of possibly losing your savings. We have seen someone go through it recently and it actually may have taken years off his life. Be prepared.