# Specific Question About Current Condo Unit/Mortgage Application Process



## iggyntangs (May 6, 2012)

So for anyone with any knowledge in the real estate industry period I was wondering if someone could help with some advice or perhaps just more knowledge on the subject matter that could help me out in understanding my current situation.

I'm a first-time home buyer and made a conditional offer that was accepted Friday before last on a condo unit at Vetro in Calgary. The "Condition Day" (when the conditions had to be waived) was for this Friday at 9PM.

This past week was to secure a mortgage, review condo documents and things of that nature. I had the condo documents reviewed professionally and for the most part from what I was able to ascertain things looked in good order and the condo seems like a good condo to buy into.

The mortgage part is where the real situation arose I have 15% down payment ready for the condo and I had a few rates held for me at the pre-approval stage at 3 banks: First Calgary, ICICI and BMO.

First Calgary went through the application process and at the very end when everything on my end (financially and credit wise was okayed) I was told that CMHC nixed my application because Vetro is an 18+ only building and CMHC will not support that (after looking into that a bit online that did seem to add up). ICICI had the ability to go thru Genworth and/or Canada Guaranty for insurers so I tried to go thru them, however Genworth said no because they did not like the current landscape in the condo building in terms of how many commercial owners to renters to regular owners (like myself would be) there are, and when asking Canada Guaranty they basically said they would not insure if Genworth was saying no as well.

Now the above upset me and really confused me as to understanding how anyone at Vetro could possibly have a mortgage without having put at least 20% down payment to avoid insurers all together.

When I asked a mortgage broker to look into the situation, she herself said that the few lenders she was asking thru on my behalf were hesitant to approve a mortgage because of the fact that insurers were saying no to Vetro.

Finally I came upon BMO that basically said they would approve it, if I could get 20% down payment to avoid insurers all together. To get to 20% however they need to get the property appraised, which is what they're doing over the weekend since I was able to get my "Condition Day" extended to this Tuesday.

Here's where I am at now...I'm wondering how unique/odd my situation really is, since I've known a few people who have bought into Vetro and have nothing but great things to say about it especially since seeing how it is so new (2008)? How hard will it be to resell down the road if there is this much fuss about it now?

Finally to make the extra 5% down payment the only way I could think of coming up with it (without being gifted it, which I won't) was to take out a personal LOC (line of credit) thru BMO...I'm wondering is there anyway else to make it up that I may be missing that may be a better option since it requires a 2% payment/month (~$300-$400 extra on top of my mortgage) and runs at a 9.25% interest rate?

Any help regarding my issue would be much appreciated, thanks.


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## kcowan (Jul 1, 2010)

The only thing I can think of is that your offering price includes the insurance fee which is required for a 15% down application. If you come up with 20%, you should get that insurance fee removed. Other buyers may have gotten the preferrable treatment before CHMC started to tighten up on the down payment. I assume you have read the minutes of the condo owners association meetings and assessed their reserves?


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## Sampson (Apr 3, 2009)

What exactly were your conditions, and what does your lawyer say?

From my understanding, your conditions were not met by the contract deadline, so the first thing would be to get a new contract offer/contract written up. If not, the seller can find someone else and give it to them during this period when you sort everything out.

Regarding the insurers, I'm not surprised they are all cautious. The government has been indicating serious contraction in desire to insure mortgages - so the only real way is obviously to come up with 20%.

Regarding how to make up the difference? My advice would be to avoid high interest rate loans, putting you at financial risk, eat it, and save up the additional 5% or more. There's no quick way to get money that doesn't have huge costs attached (whether that is high interest rates, or chance of broken bones).


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## iggyntangs (May 6, 2012)

In terms of making up the 5%, I was considering a HELOC? I'm not too versed in this so if someone could help me out regarding g that would be great. From my understanding you can only get one from existing equity from a home? If true then I could get a LOC and then when I get enough equity take out however much is left on my LOC from a HELOC to pay it off since a HELOC's interest rate is about prime instead of prime + 6ish % and also this would give me much more manageable monthly payments if I wanted since that 2% ($300-$400ish) monthly would not be required with a HELOC?

Anyway let me know whether or not that sounds viable to make up the 5%, thanks.


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## Berubeland (Sep 6, 2009)

You might inquire on a cash back mortgage...they will give you 5% of the purchase price. 

Or maybe this is a sign that you are trying too hard. It might seem awful now but things seem to work out. In fact if CMHC and all insurers are turning you down, it's not a good sign for future resale value. 

Also studies have shown that buildings with many renters do go down in value over time and are to be avoided. It's interesting to me. 

Back away slowly, the people that make these rules make them for a reason. They're not dummies


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## iggyntangs (May 6, 2012)

Hmm well an LOC at its minimum payment would take ~5 years to pay off, would I be able to get a HELOC ~1-2 years down the road to pay off my LOC, is that allowed or? Thanks for any help again.

I'm just confused because I've heard nothing but great things about Vetro, it's a new building with a great condo docs review, the unit and location itself is great for myself too with a fair selling price IMO. I just dont understand why this is so hard to secure and yes it does scare me it's this difficult, but again from everything I've heard this is the type of condo to invest in, I just want the best possible way to make up that $15,000 remaining with has little interest paid off in the end as possible.


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## marina628 (Dec 14, 2010)

My friend has a condo in a building that CMHC won't insure , you may have the 20% but down the road it is tougher to sell.She has been trying to sell almost 2 years and this issue causes deals to fall apart.I would walk and look for something CMHC will insure.


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## Berubeland (Sep 6, 2009)

There are condo buildings that do not even qualify for mortgages in Toronto. Cash only purchases. 

They don't sell well.


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## albertGQ (Jun 11, 2011)

Just out of curiousity OP. Why are you so intent on purchasing this condo. Most of the responses on this forum and calgarypuck all suggest buying something else that would be more marketable when you eventually sell. If all three insurers refuse to insure it, that is a huge red flag and I'd walk instead of trying to see if I can find another 5% to put down in order to go conventional.


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## iggyntangs (May 6, 2012)

albertGQ said:


> Just out of curiousity OP. Why are you so intent on purchasing this condo. Most of the responses on this forum and calgarypuck all suggest buying something else that would be more marketable when you eventually sell. If all three insurers refuse to insure it, that is a huge red flag and I'd walk instead of trying to see if I can find another 5% to put down in order to go conventional.


Hey AGQ, 

I'm not longer intent on purchasing it, I only stated the first couple days on here and CP to try to make something work but that's why I opened up threads on both forums to gauge what others would say, I feel comfortable walking away from it now.


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## albertGQ (Jun 11, 2011)

^^^ ok good. For me, resale value is important so I'd walk away too.
Good thread though. Brings good discussion!


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## iggyntangs (May 6, 2012)

Absolutely


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## realist (Apr 8, 2011)

Berubeland said:


> There are condo buildings that do not even qualify for mortgages in Toronto. Cash only purchases.
> They don't sell well.


I have never heard of this, and would be curious to hear more.


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## Berubeland (Sep 6, 2009)

http://www.realtor.ca/propertyDetails.aspx?propertyId=11652668&PidKey=106974636

These places here... 

I'm not sure why they can't insure the place. Too many claims maybe. I knew a contractor who did some work for the building and apparently you had to nail your tools down or they'd walk off. 

I managed a condo at 320 Dixon for a while (before they had insurance problems) and I can assure you the cockroach population there is extremely vital and healthy. I never got a complaint while the tenant was there but when I went to do the move out inspection there were some even in the fridge. When the exterminator put the bomb in there they were raining from the ceiling. The tenant was a nice Canadian girl too, in case you were thinking about "those people" This was probably the second worst cockroach infestation I have seen in 15 years. 

It's not easy to forget, I was on my way to someplace fancy and was wearing a dress. When the exterminator came the tenant was not quite finished moving out all her boxes. The exterminator started to spray in the apartment and then he told the tenant you can't stay in here, you can't come in for 4 hours. I helped the tenant move her 20 or so remaining boxes out into the hall. She left me to guard her boxes while she went to her new place to unload the truck. While I was waiting for her to come back I could see hundreds of cockroaches running out of the freshly sprayed boxes and a bunch coming from under the apartment door. Then I felt a little tickle on my calf. I looked down and saw a nice big one running up my leg. I have to admit I screeched a little bit. :biggrin: Yuck.

Maintenance fees are high and I don't know why. The common areas are not good, the carpets were in disgusting shape when I was there last.


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## realist (Apr 8, 2011)

That is disgusting. :shudder:


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