Whitehorse: New home builders are being increasingly stymied by mortgage appraisal rules, says Klondike MLA Sandy Silver, who believes the Yukon Housing Corporation could expand its mandate to help these homeowners.
Residents wishing to build their own homes using bank construction mortgages must have their proposed home appraised prior to the loan approval. There is a growing discrepancy between these two amounts, however, and Yukoners are experiencing appraisals that cut their mortgage approvals down by nearly 40%.
That means, for a resident who has been approved for a $400,000 mortgage, their appraisal limits this amount to $250,000. Silver suggests that the Yukon Housing Corporation investigate ways to bridge the gap between the appraised value, that banks can lend to, and the higher actual cost of building. For example, the Yukon Housing Corporation could either guarantee the remaining $150,000 loaned by the bank, or loan the $150,000 directly.
“In small communities, there aren’t a large number of homes at the higher-end of the market, so it’s difficult to get appraisals that reflect the realities of building today,” said Silver. “As well, since there aren’t many homes being bought and sold, there aren’t enough sale prices to set appraisals correctly. Altogether, this means that Yukoners can’t get mortgages that reflect either the high cost of building or family desires for a higher-end home.”
Home prices have risen considerably in recent years, including demand for high-end homes. Specific appraisals are based on the values of older, similar homes already constructed in the community.
“Much of the run-up in the cost of building new homes can be traced to the high cost of lots today,’ added Silver. “Those lot prices are set by the government, so it’s reasonable that the government help Yukoners who can’t get a mortgage because of these costs.”
Silver has asked the Minister of the Yukon Housing Corporation to respond to this developing obstacle in the housing market, particularly with respect to rural communities. He emphasizes that the Housing Corporation would not assist residents borrow more money than the bank has qualified them for, but only make up the difference between the low appraisal and the higher amount the bank wants to lend based on income and creditworthiness.
“If we want newcomers lured by the mining boom to stay and spend their salaries here, they have to be enabled to build family homes comparable to those they are leaving behind in southern Canada,” said Silver. “Guaranteeing the difference between building costs, and appraisals based on a small number of existing older homes, would encourage high-income earners to stay and contribute to our communities.”
For additional information contact:
Shay Kokiw 667-8942
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