Buying a Pre-Sale Property When You Can’t Get a Mortgage from the Bank
February 22, 2025 | Posted by: Alex Vinarski
Purchasing a pre-sale property can be an exciting opportunity, but what happens if you find yourself unable to secure a mortgage from the bank when it’s time to complete the purchase? Many buyers in Vancouver, BC, face this situation due to changing mortgage requirements or difficulties selling an existing home. Instead of risking the loss of your deposit, a private mortgage can provide a solution that allows you to complete the purchase and keep your options open. Private mortgages does not require any income verification.
Why Choose a Private Mortgage for Your Pre-Sale Property?
When a bank denies your mortgage application, a private mortgage becomes a valuable option to ensure you don’t lose your pre-sale deposit. Here are some key advantages:
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Avoid Losing Your Deposit:
- If you’re unable to secure a bank mortgage, you could face losing your deposit on the pre-sale property, which can be a significant financial setback. By opting for an open private mortgage, you can complete the purchase, take possession of the property, and avoid losing your investment.
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Lower Costs Compared to Losing Your Deposit:
- Even with mortgage fees and higher interest rates, the overall cost of taking a private mortgage is often lower than forfeiting your deposit. This makes a private mortgage an effective short-term solution until you can transition to more favorable financing.
Leveraging Your Existing Property
Many buyers facing challenges with a pre-sale purchase already own a home but are unable to sell it before completing the new purchase. Here’s how you can use the equity in your current property to make your pre-sale purchase more manageable:
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Access Equity from Your Existing Home:
- Borrowers can take as much equity as possible from their current home through a bank loan or line of credit. This allows you to make a larger down payment on the new property, which can help you qualify for better rates on a private mortgage.
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Lower Private Mortgage Rates with a Larger Down Payment:
- A larger down payment reduces the risk for private lenders, which can result in more competitive interest rates and lower fees. This strategy can help bridge the gap until you’re ready to sell one of the properties or refinance.
Flexible Repayment Options
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Open Mortgage Terms:
- A private mortgage can be set up with open terms, allowing you to pay off the loan without penalties once your situation stabilizes. For example, once you sell your existing home or secure long-term financing, you can pay off the private mortgage and continue with a bank mortgage at lower rates.
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Sell at Your Own Pace:
- An open private mortgage gives you the flexibility to sell your existing property on your terms, without the pressure of a pending completion date. This helps ensure that you get the best price possible for your current home while securing the new one.
Conclusion: Secure Your Pre-Sale Purchase with a Private Mortgage
If you’re facing challenges in obtaining a mortgage from the bank for your pre-sale property in Vancouver, BC, a private mortgage is an effective solution to protect your deposit and complete the purchase. By leveraging equity in your existing property, you can make a larger down payment, reduce costs, and transition to a long-term solution when the time is right.
For personalized advice on private mortgage options for pre-sale purchases, contact Alex Vinarski, Mortgage Broker Vancouver. I specialize in helping buyers navigate challenging financing situations and can provide the guidance you need to make your property purchase a success.
