What are Condotel Loans?
Condotel loans are a specific type of mortgage loan that pertains only to condotel units. They operate like primary and secondary home loans, but they have different circumstances that affect who is approved, or if borrowers can even be approved due to factors that may or may not be related to their assets or ability to repay the mortgage.
How Do Condotel Loans Work?
Condotels operate like traditional primary and secondary mortgage loans and often require the same amount of paperwork and documentation. The major difference is that most traditional lenders will not approve condotel mortgage loans due to the high risk involved. Many condotel owners are severely affected by things like the local tourism where their condotel is located, as well as the economy of tourism as a whole.
Also, many owners rely on their rental income to pay for not just the additional cost of monthly amenities, but some rely on that income to put toward their monthly mortgage costs. And if people start to sell their individual units, it can severely affect the value of all the residences in that specific condotel. In a nutshell, many lenders will not touch them.
Condotel loans typically require the same traditional documentation that other loans do, like W2s, pay stubs, tax returns, employment verification forms, and personal or business account information. Due to the fact they are less traditional, however, exceptions can sometimes be made using other forms of collateral or borrowing assurances.
Who Benefits From a Condotel Loan?
Anyone who wants to buy a second home via the purchase of a condotel can benefit from a condotel loan. Not many traditional lenders will allow condotel mortgages due to their increased risk. Home Spring is aware of the increased risk, but as with most of our non-traditional loans, we are willing to give people a little more leeway and assume higher risk to help people realize their dream of owning a second property.