The cooling housing market has left some buyers with mortgages that can't cover the full cost of their home following an appraisal. Toronto-based mortgage broker Mary Sialtsis discusses what options these buyers have.
The red-hot housing market over the last several months pushed many buyers fighting through bidding wars to put in unconditional offers at high prices.
“In the last couple of years, but especially in the last couple of months, I've had a few different clients that have dealt with this situation,” she told CTV's Your Morning on Friday. “Unfortunately, there are very few options when you've purchased a property with no conditions and no financing conditions.”
In some cases, especially when the down payment from the buy is 50 per cent more, Sialtsis says the lender may just move forward with the mortgage based on the original price of the home, even if the appraisal is a lot lower.Another option may be to get a second mortgage from a private or alternative lender. But if no other option works, buyers can try and negotiate a mutual release, which usually means forfeiting the deposit.
Sialtsis warns that putting in offers without any financing conditions puts buyers at a huge risk, as the buyer is legally bound to close the deal regardless of whether they’re able to get a sufficient mortgage.
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