5 Things you should know about financing a condo

5 THINGS YOU SHOULD KNOW ABOUT FINANCING A

CONDO

Jackie Woodward // Mortgage Broker // TMG Visit: www.mortgagegirl.ca // Phone: 780.433.8412 // Email: [email protected]

A condo or condominium is one of a group of housing units where each homeowner owns their individual unit space and all the dwellings share

ownership of the common areas. Condos can include high-rise and low-rise apartment units, townhomes and some duplexes depending on

how the title is registered.

The biggest difference between a condo and a house is if you buy a condo you will not own a specific plot of land. Instead, you own a unit in a building on a plot of land. As well, instead of the homeowner making all of the decisions about their home, with condominium ownership a condo board that is comprised of unit owners makes decisions about

the building together.


5 THINGS YOU SHOULD KNOW ABOUT FINANCING A CONDO

There are many items you should be aware of before buying a condo, in my opinion the 5 most important ones from a financing perspective

are included in these slides.

As lenders condo guidelines vary, it is important your mortgage professional knows the condo details so they can place you with a

lender who fits your mortgage needs.

Your realtor can give you more information about the condo purchase process, I will only touch on the condo details that can also affect your

mortgage financing options.



1. Condo Fees you are responsible for the repairs and maintenance of your personal

property and surrounding land when you own a house however it is not the same with a condo.

As you own the unit and the common areas are shared you pay a monthly condo fee based on the size of your unit and a porKon of those funds are

used for maintenance and repairs of the common areas among other things.

You will be personally responsible for some of the costs relaKng to your individually owned unit though there will be some excepKons where condo fees will be used to cover repairs related to the building even if it’s in your

personally owned unit.

Condo fees are calculated into your mortgage qualifying ra4os.



2. Age Restrictions

Some condo complexes have age restricKons such as no one under age 55 is allowed to live in that complex. Be aware there are less lender opKons

available with the age restricted condo purchases and you could be asked for a larger downpayment, or be charged a higher interest rate.



3. Square Footage

Lenders are being more selecKve about the properKes they have in their porPolios these days and some lenders even have a minimum square footage

requirement for condo purchases.

Ensure your desired property meets the lender minimum before removing condiKons.



4. Renter Population

If you are going to owner occupy your new condo, ask how many other units are also owner-‐occupied as some lenders have concerns with complexes that

have a high renter populaKon.



5. Condo Documents

THIS IS AN IMPORTANT ONE! I can’t stress enough how important the condo documents are to you if you’re thinking of purchasing a condo.

Condo Document Review is almost like a home inspecKon, however, instead

of inspecKng the home, you are reviewing the health of the condo corporaKon and how it’s run.

More lenders are asking for condo documents upfront as part of the

mortgage condiKons as they are looking for specific details to ensure the building and how it operates meet their requirements.



5. Condo Documents - CONTINUED

Here is a list of what documents I would like to see if I were buying a condo:

MEETING MINUTES

CONDO BY-‐LAWS

BUDGET/FINANCIAL STATEMENTS

ESTOPPEL CERTIFICATE

Keep on sliding for more details on the above documents à à à



Meeting Minutes

These are wri[en accounts of all the talk that went on at the condo board meeKngs. They detail everything the board deals with day-‐to-‐day which

involves the building or its occupants. I mean everything!

These minutes will tell you what work needs to be done and do they have enough funds on hand to complete the work. If there are not enough funds will there be any special levies? Which means each unit may be required to come up with a large sum of money to contribute to any immediately

required repairs?



Condo By-laws

Govern how the unit occupants are allowed to act. This one isn’t as important to lenders as it should be to you.

Make sure the condo bylaws don’t limit your lifestyle as they address

restricKons regarding pets, smoking, renKng out etc.



Budget/Financial Statements

Lenders like to see the most recent budget and financial statements as this will show how effecKvely the condo corporaKon is managing the building finances. They allow you to see how your condo fees are spent and how

much money the condo corporaKon has in their bank accounts.



Estoppel Certificate

The lawyer pulls this closer to your possession date to confirm there are no judgments or lawsuits against the condo corporaKon that could affect your

new purchase.



I hope this didn’t scare you off as I believe condos are a great opKon for many homebuyers as they can be quite affordable and low-‐maintenance.

If I can stress one thing before buying a condo, it’s to get a professional’s help! This could be a realtor or your lawyer who can help you with the

purchase and all of the addiKonal condiKons involved when buying a condo.

From a financing perspecKve, just be upfront and advise your mortgage professional ahead of Kme that you are thinking of buying a condo so we can

structure your pre-‐approval effecKvely.



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5 Things you should know about financing a condo