A pre-sale purchase in Burnaby has two dates, and they are often a year or more apart. You pay the deposit when you sign with the developer. The mortgage funds when the building is finished. The lender does not pay the deposit. The deposit comes from you. The mortgage is for the balance on the completion date.
I walk Burnaby buyers through that on my Burnaby page. If this is your first purchase, start with the first-home page. I also wrote a note on Vancouver pre-sales that covers the same gap on a Vancouver contract.
People treat the deposit and the mortgage as one payment. They are not. The deposit schedule is in the developer contract. It can be one payment or several. Each of those payments is due whether or not a lender has approved you. If you are using savings for the deposit, the lender will later ask where that money went, so keep the statements that show the transfers to the developer.
The completion date can move
Developers move completion dates. A rate hold covers the date on the commitment, not the date you hope the building will be ready. If the developer sends a new completion date, forward it before the hold ends. If the hold ends first, the rate is gone and the file is started again. That can mean another look at your credit, and it can mean the income documents are out of date.
Ask for the new date in writing. A text from the sales office is less useful than the notice in the contract. Send that notice with the original contract so the lender can see what changed. Do this when the notice arrives, not in the week the building is finished.
Subject removal on a pre-sale
If your contract still has a financing subject, the removal date is the deadline. The subject-to-financing note explains that the lender needs the contract before that date, not after. On many pre-sales the financing subject is short and the completion is long. The approval you get at subject removal is a different thing from the money being ready a year later. The hold has to be watched for that whole stretch.
Read the contract for the price, the deposit amounts, the completion estimate, and any assignment rule. An assignment means you sell the contract before you complete. The buyer who takes the assignment needs their own mortgage. Your approval does not move with the contract. If you think you might assign, say so before you apply, because some lenders will not hold a rate on a contract you plan to sell.
What a first-home file has to include
The file is your income, your debts, your down payment, and the developer contract. For a job, send a letter from the employer and recent pay stubs. If you are self-employed, send two years of returns and the notices of assessment. The down payment records have to show the money sitting in an account, or a gift letter if a parent is giving it. A gift that has to be paid back is a debt, and the lender will count the payment.
If you already own a home and you are buying the Burnaby pre-sale as well, the current payment stays in the file until that home is sold firm. A plan to sell is not a firm sale. The Vancouver page and the renewal page matter if the home you own is in Vancouver and the mortgage renews before the Burnaby building is finished. Tell the lender both dates.
The full developer contract, not the brochure
The deposit receipts
Any written change to the completion date
Income documents and down payment records
The mortgage statement on a home you already own, if you have one
What to do when the building is actually finished
When the completion notice arrives, the notary or lawyer will ask for the mortgage instructions. Those instructions come from the lender after the file is still valid. If your job changed, if you took on a car payment, or if you used the credit card you planned to pay off, tell the lender before the notary asks for funds. A change in income or debt can stop an approval that was fine a year ago.
You can test a payment on the mortgage calculator. The number is only a test. It is not a rate quote. The lender pays the broker fee. You pay the notary or lawyer, and you pay an appraisal if the lender orders one.
A year is a long time for a file to sit
Use the months between signing and completion for the things that actually change the approval. Pay down the debt you told the lender about, and do not replace it with a new loan. Keep the same job if you can. If you cannot, send the new letter as soon as you have it. Save the deposit receipts in one folder with the contract. When the completion notice comes, you should be able to send one package, not spend a week hunting for a transfer from last spring.
If your down payment at completion still depends on selling another home, get that home listed in time for a firm sale before the Burnaby date. A firm sale has the subjects removed. A listing is not a firm sale. Tell the lender the listing date and the subject date on that sale as soon as you have them. The Burnaby notary cannot fund the purchase on a sale that is still conditional.
Check the developer statements you receive during the build. A change to the unit number, the size, or the price is an amendment. Send it. Lenders compare the contract they approved with the contract the notary has. A mismatch in the last week is a common reason a pre-sale stalls on completion day.
Questions on a Burnaby pre-sale
Does the mortgage cover the deposit?
No. You pay the deposit from your own money on the schedule in the contract. The mortgage is advanced on completion, for the balance, after the lender and the notary are ready.
Can I get the approval when I sign and forget it until completion?
You should not. The hold expires. Income documents go stale. A new completion date has to be sent in before the hold ends. Put a reminder on the date printed on the commitment.
What if I want to sell the contract before completion?
That is an assignment. The new buyer needs a new mortgage. Tell the lender before you apply if an assignment is likely. Your approval does not transfer.
Who pays the broker fee?
The lender pays it. You pay the notary or lawyer, and you pay an appraisal if the lender orders one.
Let's go through the dates together
I'm Chad Watts, a mortgage broker with Watts Mortgages at TMG The Mortgage Group. I've been doing this work in Vancouver for more than 15 years.
Watts Mortgages
#105 - 1385 West 8th Avenue
Vancouver, BC V6H 3V9
Phone: 778-773-6631
Send the contract through the contact page or start the application. I'm happy to help you go through the dates and the papers.
