What is a Presale Condo?

It is buying the right to purchase a brand new home in a new development. The purchaser pays the deposit and is obligated to purchase the home when it does complete (is built). Deposits can range from 5-10% initially, and then another 10- 15% through the construction process, depending on the development. However you will not have to secure the mortgage until after the property has been completed. This money is held in the developers trust account until completion, they will not have access to the funds before it.

Why Would You Buy A Presale Condo?

1. Buying early in the Development means you will purchase before the prices rise as they tend to do. This can allow you to leverage your investment. Possibly to assign the contract to another purchaser for a significant profit, or use the equity to decrease your down payment with the “assumed equity.”

2. Customize your new home before it is built, it may be easier to do while it is being constructed.

3. New condos built by a reputable developer, will have the 2-5-10 New Home Warranty. Since the entire building is under warranty, there won’t be any serious structural costs for many years. This is some great risk mitigation.

4. Maintenance fees will likely remain quite low as compared to many older building who have needed some work done to them.

5. New homes are coveted by potential tenants and will garner a much higher rent from these prospective tenants, which is a great reason for investors to buy Presale Condos.

There are many great reasons to purchase a presale condo, I would be delighted to speak to if you have any questions on a particular presale or the process of purchasing a presale condo. Sign up to become a VIP Presales Member.

Chris.

Chris Ball Real Estate Advisor - Presale Condo Expert 

Mobile: 604-512-9208

Email: chris@chrisball.ca

Federal Government Changes to Mortgage Lending

New Canadian Mortgage Rules Come Into Effect July 9, 2012

Federal Finance Minister Jim Flaherty today announced 4 major changes to Canada mortgage lending rules.

This is the fourth time over the last 4 years that the Federal Government has changed the rules for mortgage insurance. This was done to cool the hot Canadian housing market without raising interest rates, which would have a negative impact on the economy.

The four major changes effective July 9, 2012 are as follows:

1) The maximum amortization on a prime mortgage will be reduced from 30 to 25 years. This change can effectively change the price of the home you can afford by approximately 10%. Please speak with your mortgage provider for their expert advice.

2) Refinancing has been lowered from a maximum of 85% loan-to-value to a maximum of 80% loan-to-value.

3) Mortgage insurance will not be provided for properties valued over $1 million. This change means for someone wishing to purchase a home for over $1 million, your down payment must be over 20% of the purchase price.

4) The maximum gross debt service (GDS) and total debt service (TDS) will be limited to a maximum of 39% and 44% respectively. Currently, GDS does not apply to qualified borrowers with credit scores over 680.

The first two measures will have the most drastic effect on real estate purchases. 1st time home buyers and  people who are planning on upsizing will be the most affected by these srticter rules.

These tighter mortgage approval criteria will reduce the number of "higher risk" borrowers who can qualify for a mortgage.

If you are planning on purchasing a home or are wondering what the implications of these new measures are with your existing home are please contact me at:

Chris Ball: Mobile 604-512-9208

or by email at: chris@chrisball.ca