How Do Condo Fees Impact Mortgage Approvals?

Many of our clients don’t realize that they do not decide if they can afford a mortgage. The bank does. (Actually, the Government does!) They check a lot of details of your financial situation before they make their decision but one of the main points is your income. Unfortunately, if you are purchasing a condo, the condo fees impact mortgage approvals significantly.

Why Do Condo Fees Have Such A Big Impact on Mortgage Approvals?

Simply put, the income that is available to make the mortgage payments is reduced by the condo fee. The bigger the condo fee, the bigger the impact. Many banks will deduct only half of the monthly condo fee from your usable income. The logic there is that the condo fees actually reduce the expenses that others may have on their freehold homes (like maintenance costs).

What Else Do Banks Deduct From My “Usable Income”?

Good question! Any debts that you are carrying are deducted. It is especially hurtful to your affordability if they are unsecured debts like credit cards. Property taxes are considered. Heating costs are considered. But what is a little hypocritical is that significant family costs like child care are not! But let’s not complain! The Government already has enough say as it is!!!

Bottom line: if you are trying to max out your affordability, condo fees can be a huge deal breaker. If you are looking at purchasing a condo, please don’t just look at the price. Look at the property taxes and the condo fees. Dollar for dollar, condo fees impact mortgage approvals WAY more than purchase price!

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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