Bad Credit, Bad Luck: Why Buying a Condo Isn’t as Easy as it Used to Be

If you’ve been considering buying a condo but don’t have the best credit, you’re fresh out of luck. CMHC, the Canada Mortgage and Housing Corporation, has moved again to keep the market stable and quash speculation by limiting funds available to banks to fund first time buyers and those with bad credit.

The move has been both demonized and lauded by economists, each side quick to point out what they do and don’t like about the plan. Either way, with funds held tightly in hand it’s not the best time to be a first time homebuyer or one with spotty credit history.

Shifting the Risk

Back in 2008, in the U.S. at least, the risk of bad loans and bad mortgages was shifted from lenders to the government. It created a massive transference of wealth – one that they’re only now recovering from. At the heart of the problem was Fanny Mae and Freddy Mac, the American version of the CMHC.

CMHC headed off similar problems here by limiting the amount of money given to banks, a.k.a. the risk assumed by the government, with the expectation that around 1 in 12 homebuyers would be affected by the lack of funds. While many Canadians had great credit a few years ago, some need a little more help a few years later.

When Payments Come Due     

But what if you had fantastic credit a few years ago when you put your deposit down? What if, through no fault of your own, you just can’t qualify for the same financing you did in 2011 or 2012?

When those down payments come due, there can be little you can do as a buyer, especially if your situation has changed. No help from the government, no help from your lender, it can all lead to you ending up in court where you could be on the hook for hundreds of thousands of dollars.

Buying a home is never easy, but it’s probably been easier than this.

Pre-Qualified Means Nothing

If you’ve been told by your lender that you’re “pre-qualified” for a mortgage, that just means you can walk in the door and fill out an application like any other customer. It basically means you’re a warm body that may or may not have the money to pay whatever’s lent to you back.

And being a warm body is a bad thing, especially with lenders across Canada trying to avoid an American-style housing bubble. There are no NINJA loans in Canada (No Income, No Job or Assets), and if you want to be able to qualify for a mortgage you’re going to need to have spotless credit,

Securing Financing is the Hard Part

If you are bent on buying a home, stopping in with your lender should be the first thing you do. Find out how much you’re approve for, how much down payment you can afford and how much gift money you can get from family and friends (if you’re a newly-wed couple for instance).

But if you can’t secure financing on your own, you can always build up your nest egg and work on your credit. It may take a little while longer to reach your goal, but you’ll get there!

The Goodale Miller Team, based in Oakville, Ontario, is the #1 team in Canada for Century 21 11 years running.  To learn more visit http://www.goodalemillerteam.com

The Dawn of the Parking Wars

A four foot wide parking spot in Toronto, Vancouver and Montreal can be worth tens of thousands of dollars – but most of us refuse to pay for them as part of our rent, HOA or condo fees. So with the population of Canada climbing annually and the supply of parking ever-dwindling, the parking that is available is becoming prime real estate.

What does this mean for you, car-owner and urban dweller? Well, we may very well be witnessing the dawn of the parking wars. If you have a parking space, hold on to it – and if you don’t, it’s time to get your sticky little fingers on one.

Developers Capitalizing on Parking Spaces

Sure, most of us don’t mind commuting – some of us even prefer it, but we still want to keep our cars. Cars mean parking spaces, and parking spaces are prime real estate that could be used for glittering glass towers and multiple tiers of penthouses looking down on a Canadian version of Gotham that Batman himself would kill to get a view of.

Real estate developers, at least the smart ones, know that there are only so many parking spaces. They’re looking down 3, 5 even 10 years down the road, commoditizing and capitalizing on existing space and squeezing every last bit of profitability out of existing space.

Owners Capitalizing Too

Even if you don’t own a car, you can rent out your space for anywhere from $150 to $350 a month – and that number grows yearly. Some even go so far as to sell their condo and KEEP their parking space, renting it out to another resident of the building or to the owner of the spot because the bylaws weren’t clear about how the parking space transfers from owner to owner.

One thing’s for sure: if you’re going to buy or rent in a major city, you need to know your parking rights and responsibilities before you sign on the dotted line.

Know the Parking Situation Before You Sign

If you’re thinking about buying a condo or even renting an apartment in a major city, parking should be a major factor in your decision (but only if you have a car). Ask the following questions:

  • Am I buying my parking spot, or am I just renting it?
  • Can I sell or rent out my parking spot (tread lightly here!)
  • What is the rent on my parking space (if any), and how often will the price be adjusted?
  • How and why could I lose my parking space? Is there any remediation process?

Your parking spot is just as important as the interior of your home – even if you don’t have a car right now, you might later. The last thing you want to worry about is having to leave your car at a mass transit depot or airport parking and paying extra fees on top just because you didn’t plan ahead.

Could this be the Dawn of The Parking Wars? Maybe, only time will tell – it never hurts to grab a spot while you can.

The Goodale Miller Team is the #1 team in Canada for Century 21 11 years running.  Specializing in Oakville luxury real estate including Lakefront homes, infill building lots, condominiums and more. For a listing of luxury homes for sale in the Oakville area visit their homes for sale page here: http://www.goodalemillerteam.com/Homes.aspx