How to Buy a Pre-Sale Property When You Can't Get a Bank Mortgage.

November 9, 2025 | Posted by: Alex Vinarski

How to Buy a Pre-Sale Property When You Can't Get a Bank Mortgage in Canada. 

Buying a pre-sale property is an exciting step. You've secured a price in today's market for a home you'll own in the future. But what happens if, when the building is complete and it's time to close, your financial situation has changed and the bank denies your mortgage?

This is a high-stress scenario, but it's more common than you think—and it doesn't have to mean losing your deposit. As a mortgage broker specializing in complex financing, I've helped many clients in this exact situation. Here is your action plan.

Don't Panic: You Have Options

The moment you realize you may not qualify with a traditional bank, it's crucial to act quickly and explore alternative paths to closing. Time is your most valuable asset.

Your 4-Step Strategy to Save Your Purchase

Step 1: Secure Short-Term Financing with a Private Mortgage

This is the most direct and fastest solution. A private mortgage can be used as a 'bridge' to get you to the closing table.

  • How it works: A private lender provides the funds needed to close the purchase, based primarily on the equity in the new property (and sometimes other assets), not your income or credit score.

  • Key Benefits:

    • No Income Verification: Perfect if your income has changed since you bought the pre-sale.

    • Fast Approval: Can be arranged in days or weeks, not months.

    • Bad Credit is OK: Past credit issues won't automatically disqualify you.

    • Open mortgage option: If planning to sell as soon purchase is completed, this option will save a lot of money on penalties. 

  • The Strategy: Use the private mortgage for a short term (1-3 years). This gives you time to improve your credit, stabilize your income, and then refinance with a traditional lender for a lower rate.

Step 2: Explore an Assignment Sale

Most pre-sale contracts allow you to assign (sell) your purchase contract to another buyer before the final closing.

  • How it works: You find a new buyer to take over your contract. They pay you the difference between your original purchase price and the current market value.

  • Key Benefit: Allows you to walk away with your deposit and any potential profit without needing to secure a mortgage at all.

  • Consideration: You will need your developer's permission, and there may be assignment fees. A realtor can help you market and execute the assignment.

Step 3: Request an Extension from the Developer

Some developers may grant a short extension (e.g., 30-60 days) if you can show you are actively working to secure financing.

  • How it works: Communicate openly and honestly with the developer's sales team. Provide them with a letter from your mortgage broker confirming that you are pursuing alternative financing options.

  • Key Benefit: Buys you precious time to finalize your private mortgage or arrange an assignment sale.

  • Important: This is not a guarantee, but it is always worth asking.

Step 4: Partner with an Investor (Joint Venture)

If you lack the down payment or income to qualify, you can bring in a financial partner.

  • How it works: An investor provides the needed funds or co-signs the mortgage in exchange for a share of the property's equity or future profits.

  • Key Benefit: Allows you to salvage the deal and still retain some ownership.

  • Important: This requires a clear, legally-binding partnership agreement drafted by a lawyer.

The One Thing You Must NOT Do

The worst thing you can do is nothing. If you simply fail to close on the property, the developer is entitled to keep your deposit as liquidated damages and could potentially sue you for any difference if they sell the property for a lower price later.

How a Mortgage Broker Makes the Difference

Navigating this crisis alone is overwhelming. As your broker, my role is to:

  1. Assess Your Situation Immediately to determine the best path forward.

  2. Act as Your Negotiator, communicating with the developer on your behalf.

  3. Secure a Firm Commitment from a private lender quickly to ensure you can close on time.

  4. Provide a Long-Term Plan to transition from a private mortgage to a traditional one.

Facing Pre-Sale Financing Trouble? Act Now.

If your pre-sale completion is approaching and you're worried about qualifying for a mortgage, don't wait until it's too late.

Contact me today for an urgent consultation. We will review your contract, assess your options, and create a strategy to protect your investment and get you the keys to your new home. More information on private mortgages here: https://www.ipotekacanada.com/index.php/private-mortgages

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