Mark David

It’s not difficult to find a new condo in Toronto’s downtown core, but for those who are looking for one, affordability has been an issue.

This is due to the new limitations placed on lending by the federal government, which have made obtaining mortgages for condo purchases more difficult. Pre-approvals given to interested buyers a few years ago are in danger of becoming invalid, an issue which may result in the loss of their deposits.

“Going into the New Year, it depends on how many are investors or first-time buyers,” says Mortgage Alliance’s Marcel Greaux. “In many cases, which depend on the development, the purchasers are required to put down at least 15 per cent via occupancy.”

The new lending rules shouldn’t come as much of a shock to condo buyers, “especially if they have put 20 per cent down,” Greaux says.

Investors and residents will be affected differently by the restrictions, especially as far as loan-to-value ratios are concerned.

“With condo buyers, it all depends on whether you’re an investor, or whether you’re purchasing to live there,” Greaux says. “Several lenders are looking at 75 per cent loan-to-value for investors especially.”

Prospective buyers don’t have to break the bank in order to obtain a mortgage for the condo they want. Some have even gone as far as selling off personal possessions in order to make ends meet. But there are other options available to them.

“One solution is to look to alternative lenders or the private space,” says Greaux. “This could help you to avoid making a rash decision and selling off certain assets.”