As presale closing dates approach, many clients are trying to figure out how to close on the presale they wrote on 2 years ago. If you are 55 years or older, we may be able to help.
For a client purchasing a presale who no longer qualifies for enough of a mortgage on the new purchase, their parents or grandparents can use CHIP to gift the necessary funds. The parents or grandparents can gift the money with no impact on their monthly cashflow (no payments required) and no tax or investment growth impact from taking the money from savings.
Clients 55 years of age or older purchasing the condo for themselves, either as a rental or a home they will eventually move into, have a few options. If they have good equity in their existing home, we can do an interalia over both properties to finance the full purchase price. We will need to payout the mortgage on their existing (if there is one).
Should the interalia not give them enough funds to close, you can also look at doing a reverse mortgage on whichever property will be their primary residence and fund the remaining amount owing through a traditional mortgage on the other property. We do not consider non-subject properties when qualifying.
And, of course, if your clients have enough equity in their primary residence to fund the purchase of the presale, no interalia is required.
If your clients intend on selling one of the properties within the first year, Reverse Open is a good option. If they plan on keeping it for longer they are likely better off to do a traditional reverse and pay the penalty when they sell. I’m happy to run the numbers for both scenario.
Recent Client Story – Presale Condo Purchase
Larry (78) and Brenda (74) have a clear title home in Burnaby valued at $3.2M. Their grandson purchased a presale in 2021, closing at the end of May. Not only does he no longer qualify for the mortgage but the appraisal came back lower than the purchase price so he also needs to make up the $80,000 shortfall.
Reverse approved loan amount: $1,242,500
They gifted their grandson $400,000 to close on his presale. The grandson didn’t need that much but Larry and Brenda decided that, rather than gift him just enough to cover the shortfall and qualify, they would gift him enough to help him live more comfortably.
Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.
Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.
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