Jake Abramowicz’s clients, a couple purchasing a 400 square foot condo as an assignment deal in Toronto, were originally turned down by a big bank.
“They went to their bank, who said they would [only] finance the new pre-build purchase price [of] $268,000,” he told MortgageBrokerNews.ca. “The couple bought for $340,000 because that’s today’s value. The bank would only give 5% on $268,000 and then an extra $72,000 as a personal loan.”
This, despite the fact that the couple had low debt servicing ratios, sufficient income and the required 5% down payment, according to Abramowicz.
Assignment deals are tricky; lenders are often wary about lending on the current value amount, instead offering to finance the original, pre-build purchase price.
The couple refused the bank’s offer and contacted Abramowicz, who had his own trouble finding financing.
“We went to [another big bank]. Here was the first problem: It’s a very small unit. [The second problem was that] the clause in the agreement stated clearly the builder is allowed to rent any unsold unit in the building to a commercial or residential tenant,” he said. “Because of that, Genworth
wouldn’t do the deal. They said it’s a mixed-use zoning property, based on the purchase clause.”
A little digging on Abramowicz’s part helped uncover some useful information, however.
“I Googled and I did research on the zoning application of this exact building. In the zoning application it clearly showed that the builder was asking for 268 residential only units – no commercial application,” he said. “I also went to the city and the building planning department, showed them this clause, and they said, ‘even if the builder has that, there is no way we would allow the builder to rent it to a commercial tenant.’”
With that information, Abramowicz contacted Genworth
and pleaded his case.
The insurer eventually approved the deal and the file was completed.
was instrumental. My BDM was on holiday and her colleague wanted to take a crack,” Abramowicz said. “It went from an auto-decline to an approval in five days.”
Have you recently completed a tough file? Share it in the comments section below.
It seemed like his clients would be unable to find financing for an assignment deal, but a little research by Jake Abramowicz – and the hard work of a mortgage insurer – helped get it done.