Financing the Purchase of a Resort Condominium at Blue Mountain
Part 3 of a 4 part series
Arranging financing for the purchase of a condo hotel unit, such as those in the Village at Blue Mountain, is not always as straight forward as buyers might expect. Since these are commercially zoned units that are principally used for the generation of revenue, many lenders treat them as a commercial property purchase with different terms and rates.
Some unit buyers take mortgages or lines of credit against the equity in their principal homes to use as a partial or full payment of their condominium purchase. In some cases, people assume existing mortgages on resale units. Some people are able to arrange financing through their own banks however, I have found that out-of-area lenders are less likely to do so compared to local lenders in our area who better understand the programs and the developments.
I don’t want to sound like I’m doing a commercial however, one of my favourite big bank branches is Scotiabank in Collingwood. It happens that they have been involved with the Village since the first launch of sales ten years ago and offer a good example of a local lender that is able to offer buyers a range of financing options. In regard to Village units, they will typically finance at a 70% loan to value ratio on the purchase price of up to 75% subject to approval) or up to 60% on units less than 462 square feet in size. Rates are at least 1% below Scotia’s posted fixed rates for 5 or 7 year terms and, they will look at a maximum amortization period of 20 years.
There are some additional costs to factor in when you are crunching numbers on a potential purchase. First, units are subject to HST. That means an additional 13% paid on closing. If buyers are HST registrants, they may be able to claim some or all of that back. All buyers are wise to consult with an accountant for professional advice in this area. Secondly, units that are enrolled in the Village Association must pay a transfer fee of 2% of the purchase price as an entrance fee into the Association for units in the Village and, 1% for the other units such as Snowbridge, River Grass and the legacy units. Of course other closing costs will include the typical fees such as lawyers costs, land transfer tax and other closing adjustments. Buyers should also be advised that their offers should always be made conditionally upon buying and reviewing TWO status certificates: one for the condominium corporation itself and another for the village association.
Next Week: Changes at Blue Mountain
Read Part 1 of series: Buying A Condo In The Village at Blue: What You Need To Know
Read Part 2 of series: Why People Buy Units at Blue