20 Jul 2021

Is Purple Title Acceptable to My Mortgage Provider?

Line of Credit: 3 Things to Know about this Finance Instrument

Purple title is a relatively uncommon type of mortgage title. It was developed after World War II due to an increase in multilevel residential properties. Ownership of these buildings was transferred to a third-party company, and rules were put in place allowing for holders in the company’s shares to occupy specific building areas. With purple titles, owners own shares rather than specific land titles. Purple titles have evolved over the years to become known as “strata titles,” which are pretty standard, while traditional purple titles are usually limited to retirement communities. 

 

Are Purple Titles Accepted by Mortgage Lenders?

Purple Titles, or Strata titles, are challenging to manage. Therefore, they are not usually accepted by banks as mortgage security. However, some lenders may be willing to accept them. Strata titles are complicated because when you use them as security for your mortgage loan, your lender takes over your lot and receives some shares in the company. When maintenance issues, insurance questions, and other expenses arise, all owners vote, which could affect your unit’s property value, impacting your lender. 

 

If My Lender Does Accept Purple Title, How Much Can I Borrow?

It really depends on the lender. In general, though, you may be able to borrow the following amounts:

 

  • 85% if you are a first-time homebuyer
  • 85% if you are an investor
  • 100% if you have a guarantor
  • 80% if you need a low doc loan. 

 

However, it is essential to note that some lenders may restrict how much you can borrow to 80% due to the complexity of purple titles.

 

Mortgage House is a specialist mortgage lender. Our team of brokers understands the complexities of purple titles and can help you find a home loan with competitive rates. 

 

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