Overview
Purchasing a presale condo in Vancouver involves buying a unit before construction is complete. This approach is popular for both investors and end-users, but navigating presale mortgages requires careful planning due to changing market conditions, unique deposit structures, and financing risks specific to the Vancouver market.
How Presale Condo Mortgages Work in Vancouver
What Is a Presale Condo?
- Presale condos are units sold by a developer before the building is constructed or completed.
- Buyers purchase the right to own the property upon completion, typically paying deposits in stages rather than the full purchase price upfront.
Deposit Structure
- Initial deposit: Typically 5–10% of the purchase price, payable once your offer is accepted.
- Subsequent deposits: Additional amounts (often 5–10% in total) paid at set milestones (e.g., after building permits are issued or at certain construction phases).
- Deposits are held in trust under BC’s Real Estate Development Marketing Act (REDMA), protecting buyers if a project is cancelled.
Mortgage Pre-Approval for Presale Condos
- Pre-approvals for presale condos are not the same as for existing homes. Lenders may offer "long-term" pre-approvals, but these typically come with rates 2–3% higher than current market rates to hedge against future uncertainty.
- Most buyers secure only a preliminary pre-approval at the time of signing, with actual mortgage approval (and rate lock) occurring closer to completion, often 2–3 years later.
- Pre-approval requirements: Complete documentation of income, down payment, and credit is critical for a reliable assessment.
Key Risks and Market Considerations (2025)
Market Value Uncertainty
- As of 2025, many Vancouver presale condos are completing at values lower than their original purchase prices. Appraisals are coming in $100,000–$300,000 below what buyers agreed to pay in 2022–2023, forcing some buyers to bring more cash to closing or risk losing their deposit.
- This situation is driven by factors such as higher interest rates, shifting immigration policy, and falling rents.
Mortgage Qualification at Completion
- You must requalify for your mortgage at completion based on then-current rates and lending criteria.
- If your financial situation changes, or if appraised values are lower than your purchase price, you may need a larger down payment or risk being unable to close.
Assignment Sales
- Many buyers consider assignment sales, which involves selling the right to purchase the presale condo before completion.
- Assignment contracts have unique terms and may include fees or restrictions. Always review these with a real estate lawyer and mortgage advisor.
Regulatory Protections and Buyer Rights
- REDMA (Real Estate Development Marketing Act) provides strong protections:
- Deposits are held in trust and refunded if the project is cancelled.
- 7-day rescission period: You can back out of your contract within 7 days of signing, with no penalty.
- Developers often require that a majority of units be pre-sold to secure financing, which can impact project timelines and the security of your purchase.
Comparison: Presale vs. Resale Condo Mortgage
| Feature | Presale Condo | Resale Condo |
|---|
| Deposit Structure | Staged (5–20% total, held in trust) | Typically 5–20% at closing |
| Mortgage Pre-approval | Initial only; final approval at completion | Final approval at purchase |
| Rate Lock Duration | Often expires before completion; long-term locks have higher rates | Locks at purchase, standard terms |
| Appraisal Timing | At completion (future market value risk) | At purchase |
| Buyer Protections | REDMA trust, 7-day rescission period | Standard contract protections |
| Assignment Option | Common (subject to contract terms) | Not applicable |
Next Steps and Recommendations
- Get a verified mortgage pre-approval before signing any presale contract: full income, down payment, and credit confirmation.
- Consult a mortgage expert to understand your risk exposure, especially regarding future appraisal and rate risk.
- Carefully review the assignment terms if you may need to sell your contract before completion.
- Stay updated on Vancouver’s market trends and policy changes, as market conditions in 2025 are leading to lower condo values at completion.
- For personalized mortgage quotes and to compare rates from top Canadian lenders, use theratefinder. This platform offers a multi-step application process for residential, commercial, and construction loans, ensuring access to competitive rates and tailored solutions. Start your application at theratefinder.ca/onboarding for the best results.
Summary
Securing a mortgage for a Vancouver presale condo offers unique opportunities but comes with significant risks in 2025, including possible negative equity and stricter mortgage qualifications at completion. Protect yourself by getting a robust pre-approval, understanding deposit and assignment terms, and working with experts. For comprehensive rate comparisons and personalized guidance, consider starting your mortgage application with theratefinder.