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Originally Posted by you&me
Or at least that's what his Brampton mortgage application says...
But yeah, sounds like Mr. Uber may have been a little optimistic about his mortgage prospects, plunked down the $260k to the builder and is now royally ####ed.
Edit #2 - so it seems like there was a year between contract and closing. This was no-doubt intentional and part of the brilliant plan... Buy at the low, low pre-construction discounted price of $2mm. Put down $260k to secure this glorious opportunity. By the time the build is complete in 12 months, the property would have appreciated 20%, because, like, why not? So now you can get a $2mm mortgage on a home valued at $2.4 and you get your $260k deposit back from the builder... And that's the math without the ####ery of the Brampton mortgage bro.
Edit #3 - And of course, with your $260k cash back in your hands, you're able to carry that low interest, $2mm mortgage for, 3-4 years, all while enjoying that sweet, compounding appreciation of 20%, yoy, cause that gravy train ain't ever stopping... right? So a few shenanigans in the ol' mortgage bro's office (located in Brampton), and an unreasonably (idiotically) high risk tolerance, and Mr. Uber can cash out in 4 years, when he has used up his $260k to carry his $2mm mortgage, that's now worth over $4mm and he has >$2mm in equity... Again, 'cause it would never stop... Right?
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That’s not how mortgages work. It’s always lower of purchase price or current value used for financing.
But he could get a private and then refinance after 6 months or a year, then your plan works.
Also, many people buy new builds with only a pre-approval in place, which aren’t worth the paper they’re printed on. Some lenders offer new build 12 month guarantees but the rates suck so no one uses them. Plus with how long construction takes, many expired.
Probably 90% of people who buy new builds just wing it and pray they still qualify at possession. Many who don’t end up getting private mortgages at double digit interest rates with five figure application and renewal fees.
The guy in this story is just a straight up moron or a liar. No one is getting a $1.5 or whatever million mortgage on $80k year not matter what rates are.