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View Full Version : What do I need to lock into a new condo project?



88CRX
05-24-2006, 02:28 PM
What do I need to lock into a new condo project?

5% down payment and thatís all? Or can I even put less down to lock in? When I put that money down is it my down payment or simply a deposit to hold the unit for when itís built?

Sorry for the noob questions lol but thanks!

benyl
05-24-2006, 02:51 PM
it is a downpayment on the total price. It is usually 5% with a pre approval from your bank. Some places want 15%. It is all dependant on the developer.

Tik-Tok
05-24-2006, 03:05 PM
Originally posted by benyl
it is a downpayment on the total price. It is usually 5% with a pre approval from your bank. Some places want 15%. It is all dependant on the developer.

Ditto, but if you don't even have the 5%, you can look at no-downpayment mortgages (a couple banks have them, Royal for one), all you need is 1.5% of the total for "closing costs" (eg, lawyer fees, etc.)

88CRX
05-24-2006, 03:15 PM
Originally posted by Tik-Tok


Ditto, but if you don't even have the 5%, you can look at no-downpayment mortgages (a couple banks have them, Royal for one), all you need is 1.5% of the total for "closing costs" (eg, lawyer fees, etc.)

Ok, so when would your mortgage payment start?

at time of down payment or time of completion of project?

Tik-Tok
05-24-2006, 03:20 PM
Originally posted by 88CRX


Ok, so when would your mortgage payment start?

at time of down payment or time of completion of project?

What ever day you've agreed upon, banks don't mind if you start early, but usually it's after you've "taken possession" of the property, as in it's ready to be moved into.

HRD2PLZ
05-24-2006, 03:37 PM
I don't think most developers would take a 0 down mortgage. Most of them are looking for a "cash" deposit (minimum of 5%) and a mortgage approval letter from your lender. Some of them don't require a mortgage letter with a "cash" down payment of 15% or more. Your best bet is to check with the developer to see what amount they would need for a deposit.

Weapon_R
05-24-2006, 03:37 PM
Some condos require a small initial deposit (refundable for a very short period of time) and then the downpayment quickly after. Make sure you get preapproved before you shop because things can turn ugly really quickly if you can't find financing when the time comes.

Tik-Tok
05-24-2006, 03:41 PM
Originally posted by HRD2PLZ
I don't think most developers would take a 0 down mortgage. Most of them are looking for a "cash" deposit (minimum of 5%) and a mortgage approval letter from your lender.

Actually what a no-downpayment mortgage is, is a pre-mortgage loan to pay for the downpayment. For years banks have offered 5% cashback when you take a mortgage with them, some of them finally figured out, "hey, why don't we just front new homebuyers the money to pay for the downpayment in the first place!"

So it's just a loan they tack onto your mortgage. You'd actually have to call both the bank, and developer to see if you can work it this way. But if you're serious about buying a place, and don't have the money right now, it's a good investment with the way property is skyrocketing right now.

HRD2PLZ
05-24-2006, 03:55 PM
Originally posted by Tik-Tok


Actually what a no-downpayment mortgage is, is a pre-mortgage loan to pay for the downpayment. For years banks have offered 5% cashback when you take a mortgage with them, some of them finally figured out, "hey, why don't we just front new homebuyers the money to pay for the downpayment in the first place!"

So it's just a loan they tack onto your mortgage. You'd actually have to call both the bank, and developer to see if you can work it this way. But if you're serious about buying a place, and don't have the money right now, it's a good investment with the way property is skyrocketing right now.

Uuuhhh thanks, I have sold a few properties with clients using 0 down mortgage.
What I meant was, any developer I know would want an actual deposit. If it is possible, it could be a good way for someone to get their foot into the market.

D. Dub
05-24-2006, 04:33 PM
Originally posted by HRD2PLZ


Uuuhhh thanks, I have sold a few properties with clients using 0 down mortgage.
What I meant was, any developer I know would want an actual deposit. If it is possible, it could be a good way for someone to get their foot into the market.


You're right..in this market a developer would not likely take a 0 down mortgage approval as security for a lot.

benyl
05-24-2006, 04:46 PM
0 down mortgages are playing with fire.

the following is not directed at the thread starter, but readers of this thread:

If you can't afford to put at least 5% down, you have no business buying a house. Sell your car, sell your TV, etc to come up with the money. Otherwise rent.

88CRX
05-24-2006, 06:39 PM
Originally posted by benyl
0 down mortgages are playing with fire.

the following is not directed at the thread starter, but readers of this thread:

If you can't afford to put at least 5% down, you have no business buying a house. Sell your car, sell your TV, etc to come up with the money. Otherwise rent.

Ya, I dont plan on putting zero down.

However.... I wasnt planing on getting into the market for 6-12 more months from now. But the sooner the better right?

tjtd00
05-24-2006, 06:45 PM
get in as soon as you can, lets put it this way, I bought my condo sept 2003, moved in on completion mar 31/04. purchase price $129,000 including upgrades, appraised last week at $225,000 95k in 2 years!!!!! swing it as fast as you can as prices arent going down for a while yet

Tik-Tok
05-24-2006, 06:54 PM
Originally posted by benyl
0 down mortgages are playing with fire.

the following is not directed at the thread starter, but readers of this thread:

If you can't afford to put at least 5% down, you have no business buying a house. Sell your car, sell your TV, etc to come up with the money. Otherwise rent.


Horsesh!t pure and simple.

For us:

Cost of renting our place we're were at while trying to save downpayment, $1100/month. Time it would have taken us to save $10,000 (for our $200,000 house), 2 years. Amount of money IN SOMEONE ELSES POCKET while saving downpayment, $24,600 .

House value now (2 years later) $340,000, so we'd have to ANOTHER $7,000 to afford the same house.

You sir, have no clue what you're talking about, and if you are in the business, you have no right to be.

broken_legs
05-24-2006, 07:03 PM
:werd:

Tik-Tok
05-24-2006, 07:12 PM
Oh, and I should add too, cost of the extra $10,000 on the mortgage, $18,500 over 25 years as opposed to the extra $140,000 (or $260,000 over 25 years @ 5.65%) it would have cost us to buy this house.

If we lived in a stable market, sure it would make more sense to rent, but with the market going up exponentionally, you can't lose with a no-downpayment (assuming you have a stable career/job)

D. Dub
05-24-2006, 08:47 PM
There's nothing wrong with zero down mortgages... they benefit a lot of people who have not been able to save a down payment because of education or family or other commitments... you get the equity lift and thats much better than paying rent for another year or two.

88CRX
05-24-2006, 11:20 PM
Originally posted by D. Dub
There's nothing wrong with zero down mortgages... they benefit a lot of people who have not been able to save a down payment because of education or family or other commitments... you get the equity lift and thats much better than paying rent for another year or two.

Yea, so what would the drawbacks be to a zero down mortgage be? What problems could I run in to?

Tik-Tok
05-24-2006, 11:32 PM
Originally posted by 88CRX


Yea, so what would the drawbacks be to a zero down mortgage be? What problems could I run in to?

Well, in your circumstance it may not work, a developer of a condo unit might want to see hard cash. You should talk to both a bank, and a condo developer about it. But if you're buying a premade condo, or house, it's only flaw is that you have to take the posted rate, instead of getting a bargain (right now it's 6.75% I think, and if you had the actual cash, you could probably get low 5's)

D. Dub
05-25-2006, 08:39 AM
Originally posted by Tik-Tok


Well, in your circumstance it may not work, a developer of a condo unit might want to see hard cash. You should talk to both a bank, and a condo developer about it. But if you're buying a premade condo, or house, it's only flaw is that you have to take the posted rate, instead of getting a bargain (right now it's 6.75% I think, and if you had the actual cash, you could probably get low 5's)

That pretty much sums it up.:thumbsup:

Alex_FORD
05-26-2006, 08:11 AM
I cant see why a builder would automatically turn down a 'O down loan'

IF the financer is willing to advance a 5% or 10% down payment to the builder, then there is not difference to the builder.

HRD2PLZ
05-26-2006, 10:45 AM
Originally posted by Alex_FORD
I cant see why a builder would automatically turn down a 'O down loan'

IF the financer is willing to advance a 5% or 10% down payment to the builder, then there is not difference to the builder.

Builder's take cash deposits to secure a sale. Financial Institutions won't advance funds to a builder before the mortgage is funded and the mortgage wouldn't be funded until
the possession date.

D. Dub
05-26-2006, 10:50 AM
Originally posted by HRD2PLZ


Builder's take cash deposits to secure a sale. Financial Institutions won't advance funds to a builder before the mortgage is funded and the mortgage wouldn't be funded until
the possession date.

pretty much

Weapon_R
05-26-2006, 02:49 PM
What type of rates are available for 0 down customers?

D. Dub
05-26-2006, 09:43 PM
usually anywhere from 2-3 points higher than the best rates...which is still a damn good deal as you stop paying rent and start gaining equity.

Tyler883
05-27-2006, 12:16 AM
Originally posted by HRD2PLZ


Builder's take cash deposits to secure a sale. Financial Institutions won't advance funds to a builder before the mortgage is funded and the mortgage wouldn't be funded until
the possession date.

Do you really think that it was my small measly deposit that secured the sale? I don't. I think it was the fact that the bank had approved the balance of funds on the possession date.

Besides, builders are more creative than you think, if advance funding is important, they can always get it somewhere else, and hide a '0 down annoyance fee' in the price of the house. Thats what car dealers do.

dkdelrey
06-07-2006, 11:23 AM
I just recently bought a $450,000 house in the northwest. a showhome... Im not a realtor or a business man but I just made 170,000 from one of my condos in downtown. which i bought a yr and a half ago....

Builders are very different now adays... yes you can put a no downpayment into a house , questions is, will the builder accept your offer? or would they give that house to someone who has money to put down? ..... according to my experience for the past few months that i looked for a house. their 1st priority would be somebody whos got a huge downpayment, or has been approved by a bank for the mortgage. some builders tho insist that you go to their financial dept. to get approved. . .

i am selling my other condo here in 10th ave. 10 st. s.w. soon.. probably in august when its done. anyone interested email me at [email protected]

also, selling my townhouse in tuscany. 2 garage very neat. with white fence in front yard. 2 1/2 bath.

any buyers are welcome to view ....just send me an email and i will talk to my realtor when you want to visit.


don
889 6637
[email protected]

visit www.mls.ca to view twnhouse in tuscany mls# c3213643

HRD2PLZ
06-07-2006, 12:18 PM
Originally posted by Tyler883


Do you really think that it was my small measly deposit that secured the sale? I don't. I think it was the fact that the bank had approved the balance of funds on the possession date.

Besides, builders are more creative than you think, if advance funding is important, they can always get it somewhere else, and hide a '0 down annoyance fee' in the price of the house. Thats what car dealers do.

At any rate, it doesn't matter to me. I would never purchase with less than 25% down payment. Any builder I have come across recently (either for myself or for clients) are looking for AT LEAST 5% down plus a mortgage approval letter. No zero down mortgage. Of course, if the builder REALLY wants the deal they can find creative ways to work around the down payment, but in this market there is a long wait list of people to go through too.

frostyda9
06-13-2006, 07:34 PM
Originally posted by HRD2PLZ


At any rate, it doesn't matter to me. I would never purchase with less than 25% down payment.

I am sure everyone would be happy to put down 25% and avoid the CMHC. However, with the average house in the area of $350k, you're looking at nearly $90,000 down. That is a LOT for the average person to save up.

Although HRD2PLZ obviously knows what he's talking about, IMO right now your best bet is to buy anything you can afford and build some equity ASAP. The market is hot enough that the benefits of a larger downpayment are currently outweighed by the fast appreciation of houses.

A handy example:


Originally posted by dkdelrey
Im not a realtor or a business man but I just made 170,000 from one of my condos in downtown. which i bought a yr and a half ago....

Had he just sat back and saved for a downpayment, he would have had to put over $9400 per month away to have the same amount of capital available for a downpayment.

Rollin'
06-14-2006, 08:57 AM
Where are some attractive condos available for presale right now? Are the ilikeLondon condos all sold out?

5abi
06-14-2006, 09:00 AM
phase1 at i likelondon is sold...but soon phase 2 is comming i'm buying for sure.

maximus5502
06-14-2006, 11:04 AM
it is a downpayment on the total price. It is usually 5% with a pre approval from your bank. Some places want 15%. It is all dependant on the developer.

It is illegal for a developer to ask for more the 5% down on an un-built property

Usually in order to lock into or "reserve" a condo in a new project depends on the size of the construction project and the limits set by the bank.

BUt, for most large developments, you can reserve a unit with $5000.00 down (I would put it in trust with a lawyer) and a signed offer to purchase.

The reason I say put it in trust is because of the situation that occured with Ingersol 10 project in Calgary (4st and 20th Ave SW) that went under and no one got thier money back as it was used as part of thier equit into the project.

HTH