mortgage for older townhouses? tricky

[TommyK]

Hi fellow REIN,

I just spoke to my TD broker and she told me that the max amortization that is allowed on the rental property is based on the appraisal. Say I am looking at 30-year-old townhouses. If the appraiser only estimates 20 year life-span of the building, then I can only get 20 year amortization mortgage.

Is this true to residential properties? or is this just TD`s policy?

Has anyone come across the difficulty of getting longer amortization when the appraisal says the property is only good for less than, say 25 years?

**Would love to hear from the older townhouse investment specialists!

Thanks in advance!

Tommy

 

[vandriani]

I`m not sure if it is any different for single family homes verses townhouses but in my experinces the mortgage length is usually the appraised economic life minus 5 years. Obviously, banks do have a maximum length.

 

[Dan_Eisenhauer]

Unless the house is a complete wreck, the appraiser is going to use a 30 - 40 year remaining economic life.

How many properties do you know that likely will not last for another 30 or 40 years? My sister lives in a 150+ year old house. It is a non-issue.

 

[PeterKinchMortgageTeam]

QUOTE (TommyK @ Sep 9 2008, 11:47 AM) Hi fellow REIN,

I just spoke to my TD broker and she told me that the max amortization that is allowed on the rental property is based on the appraisal. Say I am looking at 30-year-old townhouses. If the appraiser only estimates 20 year life-span of the building, then I can only get 20 year amortization mortgage.

Is this true to residential properties? or is this just TD`s policy?

Has anyone come across the difficulty of getting longer amortization when the appraisal says the property is only good for less than, say 25 years?

**Would love to hear from the older townhouse investment specialists!

Thanks in advance!

Tommy


Its a standard lender policy for obvious reasons - appraisers apply a calculation based on the age and type of the property to determine the remaining economic life - the lenders amoritization will be 5 years less the life. Since the 35 year is now the norm, you`d need a remaining life of at least 40 years which usually isn`t too hard to get for a property in decent condition.

 

[TommyK]

QUOTE (CanadianMortgageTeam @ Sep 9 2008, 12:42 PM) Its a standard lender policy for obvious reasons - appraisers apply a calculation based on the age and type of the property to determine the remaining economic life - the lenders amoritization will be 5 years less the life. Since the 35 year is now the norm, you`d need a remaining life of at least 40 years which usually isn`t too hard to get for a property in decent condition.

Thank you for all of your responses. I guess I was thinking that the older wood frame townhouses (approx 30 yrs old) wouldn`t last another 40 years. I haven`t applied a mortgage on a very old townhouse. So I think I will just go for it and put financing condition on my contract.

Thanks again!

 

[EdRenkema]

TD is my primary bank and gives me excellent service, however I won`t try any rental mortgages with them, tried once, it took way long, only 65% LTV and they pulled the plug at the last minute, caving in another deal I was working on. Why not use a mortgage broker famliar with RE investors? lots on here.

 

[neill]

We ran into the remaining life issue with Scotia on townhomes - at re-fi (different inst) no issues - depends on your appraiser`s opinion and bank issues.

Since then, we have dealt only with Peter Kinch`s office and the service is top-drawer......

 

[Thomas Beyer]

QUOTE (TommyK @ Sep 9 2008, 12:47 PM) ... If the appraiser only estimates 20 year life-span of the building, then I can only get 20 year amortization mortgage.

Is this true to residential properties? or is this just TD`s policy?

Has anyone come across the difficulty of getting longer amortization when the appraisal says the property is only good for less than, say 25 years?
yes, this is normal and not only TD`s policy. Try to reason with the appraiser to get a longer house life-span ! Many houses in Canada last 100+ years !

or: get a lower purchase price for the house !

 

[MikeMcCrae]

I own a house that was built in 1910. Built out of wood and is in so so shape in my opinion and it appraised with a 40 year economic life. Also brokers have much more flexability then a bank rep does. And most brokers have access to TD if that is where you really want your mortgage.