How To Find the Right Property for You and Your Bank

Melanie ConsMortgage Talk Canada

There are two investments a bank is making when they decide to provide you with a mortgage: You and the Property. So, if you’re being turned down for a mortgage it could be the property that is the issue, not you. Here are some properties to avoid:

  1. An apartment smaller than 40 square meters – Because they are so tiny, they could be harder to market should the bank have to take possession. Banks may not believe there is enough demand for a small apartment, so they will have a hard time getting their investment back.
  2. A property in a ‘bad’ or ‘risky’ neighbourhood – Tried and true rule is to buy the worst house in the best neighbourhood you can afford. Setting up in a bad neighbourhood with a lot of crime or unemployment could be a red flag to financial institutions. Deterioration of the value of the property due to crime or negligence could be an issue here, so avoid it if you can.
  3. Cookie cutter apartments in the suburbs with continuous buildup – The concern here is that people may find themselves vulnerable if the property market collapses. To a bank it’s a diversification issue: having money in too many properties of the same type could be very risky if the market goes sideways and they can’t sell them.
  4. Properties that aren’t structurally sound – Never purchase a property without looking at it yourself and getting it surveyed. If a property doesn’t comply with a building code or it contains something hazardous such as lead paint or asbestos, this could affect the future saleability and  cost the owner more money down the road.
  5. Properties with geological issues – This has become an increasing concern with the risks of flooding skyrocketing and global warming in the forefront of everyone’s mind. Areas on the water or built on marshland hold a much higher risk than they once did and one flood could leave a property uninhabitable.

These issues may seem extreme, but they could save you money down the road. Talk to a mortgage specialist today to get further assistance with finding the right property for you and your bank.

Similar Posts:

Sharing is caring!