Has the downturn in Toronto affected your clients?

Eric Iankelevic
Mortgage agent
Sherwood Mortgage Group

“Yes, it has – in both positive and negative ways. Because the mad rush to purchase is over, buyers can demand reasonable conditions, insulating them from nasty surprises when applying for financing.

On the negative side, borrowers who purchased new homes at the peak of the market have experienced issues selling in a slower market. In several cases, buyers felt compelled to accept lower prices than anticipated, resulting in them requiring higher mortgages to cover the difference. In extreme cases, some were unable to sell their homes and had to seek alternative solutions or extensions to their new purchases, causing much anxiety.”

Daniel Vyner
Principal broker
DV Capital Corporation

“We’ve noticed both direct and indirect complications. This has been reflected in properties being appraised at lower values than the accepted purchase price from earlier in the year, and in subsequent appraisals dropping even further in a period as short as 30 to 60 days.

Consumers are opting to breach contracts, vendors are providing takeback mortgages, and we’ve seen cases where purchasers were forced to take credit card cash advances to complete the purchase. There have also been instances of the ‘domino effect,’ where simultaneous transactions were placed in jeopardy.”

James Laird
President
CanWise Financial

“As home prices soften, there is a greater risk that the appraised value will come in below the purchase price. If the transaction is still conditional, then the buyers can walk away from the deal or try to negotiate a lower price. If the deal is firm, then the buyers are contractually obligated to continue with the transaction.

If the buyers had planned on the minimum down payment, then they will need to come up with the shortfall. If the buyers were planning on putting exactly 20% down, then they can either pay high-ratio insurance or come up with the shortfall.”