League Financial Partners is building the tallest tower on Vancouver Island at Colwood, but it is its plans for a new kind of mortgage for condo buyers that has raised eyebrows.
League Financial CEO Adam Gant announced the company's equity mortgage program that he said will offer customers a larger down payment in order to avoid insurance premiums and reduce their debt. "We've created a whole new kind of mortgage," Gant said.
"The equity mortgage is the next revolution in homepurchase financing."
Homebuyers will need 10% of the purchasing price, but League Financial will then loan them an additional 10 to 25% in order to qualify for a 65 to 80% conventional mortgage.
The mortgage program is designed to allow buyers to avoid mortgage insurance premiums from the Canadian Mortgage and Housing Corporation and qualifies them for a 30-year amortization period.
New mortgage rules in Canada, announced in June, reduced the amortization period from 30 to 25 years for government-insured mortgages.
Gant said League's equity mortgage results in monthly payments up to 40% lower than a CMHC-insured 25-year mortgage because no payment of interest or principle is required.
"Equity mortgage covers the majority of the downpayment, but ... there is no monthly payment for it," he said. "Relying solely on debt is old fashioned and just plain dangerous."
The new mortgage program comes as the company prepares to put homes for the first phase of the Capital City Centre project on the market as early as late September.
Phase one construction, mostly retail space, is well underway and will be built out over the next five years at an estimated value of about $250 million. League then plans to complete a 27-storey residential tower by 2014. The high-rise will include 208 condos with prices starting at $270,000.
The final portion of phase one will be a second 27-storey residential tower, a multi-storey residential mid-rise building above a 33,000-square-foot grocery store and additional retail and office buildings.
