If you’re trying to buy your first home, you have to ask yourself a lot more questions than would-be homeowners did twenty years ago. One of these questions is, “Should I invest in a house or a condo?”
This is especially true in large metropolitan cities where traditional house prices are soaring and the condo market is booming. But the question is a lot more complex than deciding whether a backyard or concierge is more important to you.
In fact, one thing that a lot of homebuyers don’t consider is whether or not they’ll be able to secure a mortgage for the home they want to buy. Contrary to popular belief not all mortgages are made equal, and one factor that can make a big difference is whether you’re trying to buy a house or a condo.
Is it easier to get a mortgage for a house or a condo?
While they might be more affordable than houses in a lot of cities, it’s a lot harder to get a mortgage for a condo.
It’s for this reason that more than 50% of condo purchases are made in cash!
Due to tight lending standards since the recession, it’s become incredibly difficult to get a loan to buy a condo. And it’s not just because less people make enough money to qualify.
In fact, in a lot of US cases the condo development itself often doesn’t qualify because of regulations put into effect by the Federal Housing Administration after the recession.Thankfully we don’t have that issue here in Canada, but it’s still increasingly difficult to get a condo mortgage.
One of the biggest risks seen by the FHA, is that the homeowner isn’t directly responsible for the property’s future condition. Contrarily, it’s dependent on the condo association, other tenants, and the structural integrity of the whole building.
What to expect if you’re planning to buy a condo?
- Save for a larger down payment
As we said, it’s a lot easier to buy a condo with cash than with a mortgage. If the condo owner themselves sees that you’ll have an easier time with monthly mortgage payments, they may be more inclined to take you on as a new tenant.
- If you CAN get a mortgage, you’ll be paying more
If you do end up finding a lender to offer you a mortgage for your condo purchase, be prepared to pay more. Since more people tend to default on condo purchases than traditional homes, there’s a good chance you’ll be paying a fee as high as .75% of the overall loan amount with your average lender.
However intimidating these statistics look, we at Northwood Mortgage™ know the importance of bringing equal opportunities to everybody, no matter what you’re looking for. Talk to our staff today to see how we can help you get the most reasonable condo mortgage possible.