Financial Leverage and Presale Condos in Vancouver

I LOVE Questions and Comments on my blog posts and appreciate them HUGELY!!

We recently had a great question (Thanks Again Florin!) in the comments section of Episode 2 of How to Buy a Presale Condo where we discussed the advantages of pre-construction condos for Owner/Occupiers.

This question was SOOOO GOOD, I decided to bring in a mortgage broker, Chad Watts and shoot an entire video on this topic!

Florins Question:

I asked my mortgage specialist about point 3 “Financial Leverage.” The one where you mentioned “buyer who previously was a high ratio borrower to become a low ratio borrower” if the property value goes up. She told me that this in not the case anymore. The bank will only base the financing on the purchase price of the home. Is this correct and if so is this true to all banks?

The mortgage specialist Florin spoke to is right.

There are rules restricting lenders from giving a mortgage on the actual market value of a presale condo if it has gone up in value from when it was purchased pre-construction to when it completes.

BUT, this does not mean the buyer of a presale condo in Vancouver cannot leverage the increase in value of the property between the time of purchase and the completion date.

Can a Presale Bought High Ratio be Completed on Low Ratio? Yes, in a Roundabout Way!

This only works when the presale Continue reading →