Mortgages for Pre-Sale Homes

Essential information to help you buy a pre-sale home.

Buying a brand new condo, townhome or house?

Pre-sale purchases are very common in some markets. In Greater Vancouver and some of the bigger markets across Canada, where many new home purchases come in the form of condominiums, pre-sale purchases offer a great opportunity to buy your first home, live in a vibrant urban community, and share convenient common amenities with your neighbours.

There are a lot of advantages to pre-sale homes. Notably, you’re the first person to live there! Everything is fresh and new, and you often have an opportunity to work directly with the developer to tailor the unit to your tastes.

The perfect pre-sale mortgage

Mortgages for pre-sale homes aren’t significantly different than mortgages for existing homes—the main difference is the purchasing process. Because you’re agreeing to purchase before the property is fully built, there’s generally more time between when you apply for an initial pre-approval and when you eventually close on your completion mortgage.

Fortunately, Nest Mortgage is with you every step of the way. Starting with this handy guide for pre-sale mortgages. Got more questions? Don’t hesitate to reach out.

Pre-Sale Home Buying FAQ

What’s the difference between buying a pre-sale and buying an existing property?

Honestly, not much. The main difference is the timing of everything. With a pre-sale, you’re agreeing to buy a property that won’t be fully built for many months.
Buying first also comes with risks. If you buy first, then sell your current home for less than you’d hoped, you run the risk of being ineligible for your financing for your new mortgage.

Maybe you want to consider keeping your existing home as an investment, with a renter to help cover the cost. You can refinance to access the down payment for a new home and the mortgage interest you pay becomes tax deductible.

The bottom line: Every situation is different. Come to Hub and we’ll help you work out the right approach for you.
How does the timing work for a pre-sale mortgage?

Before you even begin looking at pre-sale homes, it’s helpful to know how much you can afford—what size mortgage you can obtain. So it’s wise to start the mortgage pre-approval process early. The developer may ask for evidence of mortgage approval as a condition of your purchase—that’s another reason to start the process.

Once you fill out our online application, we’ll work through the approval process and find current rates. But we’ll continue to monitor the mortgage market as your home is being built. Then, around 120 days prior to your property being complete, we’ll lock down the best possible rate available.
Do I start paying my mortgage when I agree to buy the pre-sale home?

No. Your mortgage does not start until your property is complete. That’s when you start making payments.
How much do I need for my down payment?

For most people, the minimum down payment you can make is 5 percent for the first $500,000 of the purchase price, and 10 percent for the portion between $500,000 and $999,999. For homes that cost $1 million and up, the minimum down payment is 20 percent of the purchase price.

So, for a $700,000 home, the minimum down payment is calculated like this:
$500,000 x 5% = $25,000
$200,000 x 10% = $20,000
For a total minimum down payment of $45,000.

If you have placed a 10 to 20 percent deposit down with the developer, you have the option of increasing or decreasing your total down payment upon completion.

Note: If you’re self-employed or have a weak credit score, you may need a larger down payment.
Are there any closing costs or other fees I should know about?

There are a few additional costs to consider when buying a home. These may include legal fees, an appraisal expense, GST (on new and pre-sale homes), home inspection fee, and property transfer taxes. We’ll provide a detailed summary of the costs you can expect. Some good news: Unless your mortgage needs are extremely complex, which is very rare, our services do not cost you a dime.

Don’t believe us? Check this out

Joe Harb

A pleasure to work with. They pre-approved my mortgage and checked in periodically to see how my house hunting was going. When I found the right place, Hub Mortgage Co. were quick with responses and provided information and advice wherever possible. They still continue to check in and see how things are going. Experts in the industry, you can rest easy using their services.

Sarah Richards

As a first time home buyer in the intimidating Vancouver market, I had a lot of questions and fears about the process. Hub Mortgage Co. were with me all the way, helping guide me through everything I was unsure about. They treated me like I was their #1 customer, and not just in the care and attention the paid. They also got me an amazing rate on my mortgage.

Gabby Still

Referred to us by a friend, Hub Mortgage Co. were able to help us out with our mortgage renewal. It being our first time renewing, we had some issues and also a ton of questions that Ray and Merissa took care of without hesitation. We would recommend Ray and his team to anyone who’s looking for a mortgage broker.