Sometimes Banks Hate To Part With Mortgage Money

It seems Toronto lenders are always fighting for ways to for us to use them for a mortgage.  But I got to thinking there has to be a line where the big lenders (banks) put on the brakes and say NO to issuing a mortgage. With lots of help from Maria Thompson, mortgage broker with Dominion Lending, we were able to put together some of the properties where the banks and larger mortgage providers may give you the NOT APPROVED stamp.

  • Assisted living properties – These units are geared toward seniors who require assistance in the terms of medical care or communal living.  What make lenders uncomfortable are optics…lenders don’t relish foreclosing on a senior living in assisted housing.
  • Fractional Interests – This is where fee simple title is divided into various interests and held as a whole.  With multiple owners banks only own a portion of the title, therefore the risk is the lender has limited marketability between existing owners and not the general real estate market.
  • Co-operative Housing – Co-operative housing units were built in the 60’s and 70’s, however condominiums replaced them as the preferred type of ownership.  Residents don’t have an actual deed but they have a share in the co-operative.  For the lender they only take assignment of the shares, so once again it only allows them limited marketability.
  • Grow Ops – Due to remediation issues and future disclosure issues lenders won’t be lighting this one up.
  • Life Leases –  These are almost exclusively use by seniors, however unlike assisted living properties the residents live independently in separate units. Here the individual has the right to use, occupy and enjoy the unit for a defined period of time. There are restrictions to whom the rights of the unit can be sold to, therefore banks dislike the limited marketability.

You should know that there are private lenders who will lend to the above properties, however the terms and conditions will not be as favourable from what you’d get through traditional and more established mortgage providers.