Red Deer Mortgage | Mortgage Red Deer
Red Deer Mortgage | Mortgage Red Deer

Condos Overview for Red Deer


There are two types of condos under the Condominium Property Act, conventional condos and bare land condos. While there are similarities between them – including how you qualify for a mortgage to buy one – there are differences, as well. Let’s look at each in greater detail.


Conventional Condos

Conventional condominiums are part of a building or structure. Whereas apartments are rented, condos are owned by the residents – even when the building is apartment-style. Each unit’s boundaries are defined by the walls, floors and ceilings. The unit owners own what is inside these boundaries. Residents are responsible for the interior of their units.

Everything outside of these boundaries is common property. Common areas like courtyards and hallways are obvious. The roof and attic are less obvious “common” property. The condo fees paid by residents help to pay for the maintenance of common areas. They often include the heat bill, too, since they’re heating the entire building.


Bare Land Condos

Bare land condos are defined by the size of the lot. Bare land condominiums charge fees for the maintenance for common areas like sewer mains, road maintenance, snow removal and common buildings. Areas outside of the lot are common property and considered equally shared by all unit owners. Bare land condos may include duplexes and townhomes or single family detached homes.


What You Need to Know Before Buying a Condo


Condos are popular because they are low maintenance for residents, since the maintenance is handled by the condo association or those they pay to do the work. All the work may be done by a professional management company the condo association members select. The condo board collects fees, pay for insurance and other bills and set the budget for all of this maintenance. They have to pay for maintenance and repairs to common property.   They should have a reserve fund to pay for major repairs like replacing a roof or boiler.

If you’re buying a condo as a primary residence, you may be able to put as little as 5% down. The main difference between buying a condo and a traditional single family home is condo fees are factored into determining whether or not you qualify for a mortgage. When you apply for a Red Deer mortgage for a condo, 50% of the condo fees have to be added to the debt servicing to determine if you qualify.

Suppose you want to buy a $400,000 single family detached home. You’re at the edge of the debt to income and overall income qualifications, but you could buy a house. If you wanted to use that same loan to buy a luxury condo, the answer is no. The condo fees would disqualify you, because you cannot afford them and the mortgage. A general rule of thumb is that every $100 in condo fees reduces the amount you’d be pre-approved for by $10,000. In the case of our $400,000 home approval, a condo with $400 a month fees means you could really only qualify for one with a purchase price of $360,000.  A Red Deer mortgage broker can help you find a mortgage with terms you can afford and possibly allow you to afford that condo you want in Red Deer.

When you decide to buy a condo, get a copy of the condominium documents. Read through it carefully. Monthly or annual condo fees are one factors to consider. Another to consider is condo associations have to budget for maintenance and the repair of common infrastructure. Condo association may have to issue levies if they find themselves short for critical repairs. Also take the time to learn about other restrictions and requirements, such as limits on the number of pets or prohibitions on particular breeds. There may be limits on outdoor furniture or decorations. There may be prohibitions against visitor parking or limits on how long company can stay over. Know what is important to you and how that relates to the rules that come with that condo contract.