Getting a condo mortgage in Toronto comes with its pluses and minuses. Though mortgage rates are low and should remain low throughout the rest of the year, buyers can continue to take advantage of making low, affordable payments under the right mortgage contract. The disadvantage with the current Toronto condo mortgage system is in getting approved – banks are starting to reign in mortgage approvals.

If you’re looking to buy a condo in Toronto, getting approved for a mortgage may be the hardest part. If you’re a first-time buyer who is already leveraging their finances, if you don’t fit a low-risk profile from a lending perspective, you might be in trouble. There are many things to keep in mind in terms of condo mortgages and whether you could qualify. For example, if the market were to suddenly devalue by 20 percent, would you owe more than you own by purchasing a condo – this could be a risk. Also, the Canada Mortgage and Housing Corporation suggests a debt-to-income ratio where monthly household costs are no more than 32 percent of gross monthly income. This standard is likely not to be met by many first-time buyers as well as the majority of condo buyers if you’ve recently bought in the last five years.

If it’s possible to gain mortgage pre-approval, do it and get it done now. The faster you get pre-approved, the more re-assured you can be in moving forward with the condo purchase. That said, know that if you are non-traditional i.e. a freelancer or entrepreneur, it can be very difficult to get mortgage pre-approval. Even with a down payment as high as 50 percent and a strong monthly income, you can still be denied without a co-signer or guarantor.

What you ideally want with a condo mortgage and what you need to know is that you don’t want to leverage yourself to the point of breaking. Get a mortgage that is not going to dry you up, that will allow you to enter the real estate market and start building equity.

Therefore before you move forward with a condo mortgage, consider paying off existing debt first. In addition, if you don’t have career stability, you may want to consider spending anywhere from six months to two years establishing yourself professionally.

Remember. You need to be ready to buy – and not everyone is. Though buying a condo is a smarter financial option than renting one, if you’re not ready, you could sink yourself just trying for one. Don’t make it a stretch. You want to be comfortable with the terms of your condo mortgage and with the condo you are purchasing. If you are ready though, the smartest advice to give is to make the move as soon as you can if you are buying into the Toronto condo real estate market. Things are not going to get any easier in terms of mortgages and as potential barriers arise to real estate ownership, you want to make sure you are set up as early as possible to get your mortgage taken care of.

In terms of the current Toronto real estate market, getting mortgage pre-approval before offering on a property is a necessity. Otherwise you run the risk of finding yourself having to pull out, incurring all the related penalties with that action.

What happens if you are denied for a condo mortgage by your bank? That’s not necessarily the end of your condo buying dreams. Hire a good mortgage broker. Talk to them about getting a co-signor or guarantor. In addition, by going to a smaller lender and/or credit unions, these organizations commonly will have less strict approval criteria. All in all, the main thing is you really want to make sure you can afford your condo and your mortgage as not everyone in the market and those struggles are very real. If you set yourself up with something that is more expensive than what you can afford, you are setting yourself up to fail.

Buying a condo once you have settled the mortgage details can eliminate a lot of the worry. By doing it smart, you will ensure that you are safe financially in the long-term and that you are ready to begin building your equity in the Toronto condo market.

Jason LeBlanc

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