Types of Home Ownership – Freehold, Leasehold, Strata or Cooperative

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The two more common types of Home Ownership are Freehold Ownership and Condominium (Strata) Ownership. Less common are Leasehold and Cooperative ownership. Let’s discuss the different types of Home Ownership.

Freehold Ownership – You own the building and grounds it rests upon for an indefinite period of time and have full use and control of the land and buildings on it, subject to any rights of the Crown, local land use bylaws and any other restrictions in place at the time of purchase. Contingent on the Zoning or bylaw, you have the freedom to make changes to building and yard and are responsible for cost and maintenance.

Condominium (Strata) Ownership -This is the more typical type of ownership for Condo’s in which you would own your condominium unit to which you get a title, and you also jointly own common property (common elements) along the other unit owners in the condominium complex. Repairs and maintenance of the common property (can sometimes some elements in your unit) like exterior walls, windows, lawns, gardens and driveways would be the responsibility of the condominium corporation and such corporation would have the control modifying the unit, for example, exterior painting, they would determine when painting is done, colours, contractor and/or make the payment. Should want to make changes, either in or outside of your unit that is not part of the condo standards, you would need permission from the board of directors.

Leasehold Ownership – You would own the actual building or unit, but would rent or lease the land itself for a set period of time and there are are varying lease terms. Typically this type of ownership is used for townhouses or apartments built on city-owned land. The reason people may choose leasehold over Freehold as it typically over 20% cheaper and no Property Transfer Tax on closing. Before you put too much effort, find out how long the head lease is; most Financial Institutions require it be 5 years longer than the amortization of the mortgage loan.

Cooperative Ownership – Similar to Condo Ownership, but instead of a particular unit, buyers share in the entire building or complex and each shareholder is assigned a particular housing unit and should you decide to sell, the co-op board has the right to reject prospective buyers.

Information on obtaining a mortgage for Leasehold or Cooperative Ownership – You may find your Mortgage Lender more cautious about financing Leasehold and Cooperative property as they are considered riskier types of collateral and may come with a higher mortgage rate and more of a down-payment. financing options generally being available and since no land actually changes hand, no Property Transfer Tax is due on closing. Both these factors combined can amount to sizable savings and a lifestyle boost as well.

Speak to your Mortgage Broker or Financial Institution to obtain more information.

Vik Palan

Vik Palan

Chief Editor - Ratestead.ca

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