Real Estate

Mortgage for condo <500 sq ft

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  • Oct 25th, 2019 10:45 am
[OP]
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Jan 29, 2010
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Toronto

Mortgage for condo <500 sq ft

I was told today by TD that they won’t give mortgages for condos smaller than 500 sq ft even in Toronto. Does anyone know if this is the same with other Big 5 banks, and if there are any relatively big banks who would?

I’m surprised because Toronto is getting pricy and condos less than 500 sq ft will just be more and more common especially in downtown core.
Last edited by jillaryit on Oct 18th, 2019 1:29 am, edited 1 time in total.
15 replies
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Aug 11, 2019
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Toronto
I have a mortgage with RBC for a bachelor that's about 400 sq ft in the GTA.
If it's closing within the next 90 days, I can direct message you the contact details for my RBC rep.

Now, if you purchased the condo for $1600 a sq ft (like Big King), they may not give you the appraisal you are looking for.
jillaryit wrote: I was told today by TD that they won’t give mortgages for condos smaller than 500 sq ft even in Toronto. Does anyone know if this is the same with other Big 5 banks, and if there are any relatively big banks who would?

I’m surprised because Toronto is getting pricy and condos less than 500 sq ft will just be more and more common especially in downtown core.
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It is completely doable and it all depends on your lender going the extra mile for you. i would suggest getting a broker involved.
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jillaryit wrote: I was told today by TD that they won’t give mortgages for condos smaller than 500 sq ft even in Toronto. Does anyone know if this is the same with other Big 5 banks, and if there are any relatively big banks who would?

I’m surprised because Toronto is getting pricy and condos less than 500 sq ft will just be more and more common especially in downtown core.
There are lenders with no square footage requirement. Most do have one though.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Newbie
May 3, 2018
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I was thinking of buying a 395 sq ft condo in downtown Toronto but now I am hesitant. HSBC said they need some extra review if it is smaller than 450 square ft. My friend who is a mortgage advisor said lately he is seeing preconstructions getting lower appraisals than purchase price.

Can anyone confirm on these?
Sr. Member
Sep 24, 2006
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RBC does < 400 sf. I can message you a contact if you like.
Gimm2277 wrote: I was thinking of buying a 395 sq ft condo in downtown Toronto but now I am hesitant. HSBC said they need some extra review if it is smaller than 450 square ft. My friend who is a mortgage advisor said lately he is seeing preconstructions getting lower appraisals than purchase price.

Can anyone confirm on these?
Jr. Member
Apr 28, 2009
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CIBC does mine that's 495 sq ft downtown. BMO wanted to charge a premium because it was under 500 sq ft. DM me if you want the CIBC contact.
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jillaryit wrote: I was told today by TD that they won’t give mortgages for condos smaller than 500 sq ft
Lie
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Dec 21, 2013
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Scotia wouldn't do a condo for me that was less than 550 sf. This was in 2014!

Just go elsewhere. Highly recommend the Credit Unions as well.
[OP]
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Jan 29, 2010
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I called all big5 banks. Only RBC doesn’t have a square footage limit but their rates are kinda high. Meridian also has square footage limit. Don’t know which one to go with. BMO and TD are the lowest rates, but may charge me more or don’t lend me pending their credit team assessment...
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Nov 10, 2014
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Huh, I had no idea square footage limit was a thing. Is there a particular reasoning/ rationale behind this from the lenders?
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Jun 4, 2013
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Vancouver
when I asked around in 2017 most banks in Van won't do a mortgage with a unit that's less than 500sq. Something to do with higher risk. This was back in 2017 and most one bedroom units at that time was > 500sq ft.
Now I see apartments that's 2 bedroom 1 bath for 646aq. wonder how these micro units get mortgage.

This back a few years ago so things might change now.
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Tadalafil wrote: Huh, I had no idea square footage limit was a thing. Is there a particular reasoning/ rationale behind this from the lenders?
Big banks are slow to act.

The rationale is that the small ones are riskier to collateralize against as their values will be decimated in a downturn.
[OP]
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georgecantstandya wrote: Big banks are slow to act.

The rationale is that the small ones are riskier to collateralize against as their values will be decimated in a downturn.
For places like downtown Toronto, I would think a smaller condo would still be more in demand than a larger condo in a downturn given people want to get in the market. Also, don’t quite see why the value of the smaller condos would fall faster on a % standpoint than a larger unit.
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jillaryit wrote: For places like downtown Toronto, I would think a smaller condo would still be more in demand than a larger condo in a downturn given people want to get in the market. Also, don’t quite see why the value of the smaller condos would fall faster on a % standpoint than a larger unit.
There's a ton of small units vs. larger ones.

Just my opinion.
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jillaryit wrote: For places like downtown Toronto, I would think a smaller condo would still be more in demand than a larger condo in a downturn given people want to get in the market. Also, don’t quite see why the value of the smaller condos would fall faster on a % standpoint than a larger unit.
I wouldn't say condos less than 500 square feet have a higher demand, but that's besides the point.

The problem with your statement, is that you're only looking at Toronto. MOST A lenders don't discriminate from city to city. For example, they assume the same vacancy rate in Toronto as a rural town...which isn't realistic as we know. So their policies reflect the Canadian market as a whole, not just Toronto.

Hope that makes sense.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative

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