Buying a Pre-Sale Home

With pre-sales if you find a place and write an offer the process is very much similar to buying an existing property except the paperwork and the terms in the contract are a bit different.

All pre-sale contracts come with a Recission Period of 7 days. This is like the Subject to Financing clause in the purchase of an existing home. Basically it gives you 7 days to change your mind for any reason so we treat this as the period we have to 100% secure the financing so you know you have the mortgage.

We get the financing all in place and set the completion date out for 120-days, as far as we can. At the end of the 120-days if we need more time to completion we update the credit checks, provide new pay stubs and get the bank to extend it out another 120-days at the rate they’re offering at the time.

The only way to get a rate that is held and guaranteed to the end of the construction process would be to go direct to the bank that the developer used to fund the construction process. That bank has a vested interest in the units being sold so they will hold the rate for potential buyers but at a MUCH higher rate than what is competitive.

There are also a couple of banks that have 6-month and 12-month rate hold periods but their rates are also much higher than the most competitive on the market so most times it really isn’t worth it.

One other consideration to entering a contract of purchase on a new build is to ensure the contract has the option to “Assign” the contract before completion. This way if for some reason you are unable to secure the financing to buy the property when complete you have the ability to “sell” the contract to another potential buyer and get your deposit money back.

If there is a lengthy time between when you enter the contract and the completion date on construction you could also see an increase in value and possibly share in the appreciated value.

If this is a purchase you are considering I recommend working with a realtor who is knowledgeable with these types of transactions and you may even want to get some advice from a real estate lawyer as to your options.

If you’re looking at buying a pre-sale, get in touch today! Just looking, but want to know where you stand? Reach out for a free qualification and personalized game plan. Your dream home is just one click away

Kristin Woolard

Post Bankruptcy or Consumer Proposal (CP)   

Bad things happen to good people all the time, and bankruptcy or consumer proposal is no longer viewed the same negative way by lending institutions as it once was. If at some point you had no choice but to claim bankruptcy or opted for a consumer proposal, that doesn’t mean you won’t be able to get a mortgage to buy a home.

The date of the bankruptcy was discharged, or the CP was satisfied is the date that is considered Ground Zero if you will. What you do after this date is what matters most.

The key to getting a mortgage after this is to have re-established credit. Banks view bankruptcy and a CP the same way, in that new credit must be established after the bankruptcy is discharged or the consumer proposal has been satisfied.

What banks want to see is the Rule of Two. That means 2 credit accounts that were established after the date of discharge or CP pay out, active for a minimum of two years and with a minimum limit of $2,000. There can be no late payments or collections post-bankruptcy or after a consumer proposal was entered into.

Once you have satisfied the minimum re-established credit requirements you will be viewed as having a clean slate. You can purchase a home with as little as 5% down just like anyone else, and you will have access to any government incentive programs to help you buy, if it’s your first home.

Post Bankruptcy or Consumer Proposal? Want to know where you stand? Reach out for a free qualification and personalized game plan. Let’s make this the year you buy your dream home!

Kristin Woolard