Pros & Cons of buying a Presale

Kelly Hudson • May 19, 2023

Buying a presale is a popular strategy in the real estate market that allows buyers to purchase a home before it is completed or even before construction has begun. This approach comes with both advantages and disadvantages, which are important to consider before making any investment decisions.


Pros of buying a presale:

1. Lower cost: One of the most significant advantages of buying a presale is that it can be less

expensive (no guarantees!) than purchasing a finished property. Builders and developers often

offer early bird incentives to attract buyers, such as discounts on the purchase price or upgrades.


2. Increased value: If the market trends upwards between the time the presale is purchased and

the completion of the property, buyers could see a significant increase in the value of their

investment. This could mean that buyers are able to sell the property for a higher price than they

paid for it, providing a healthy return on investment.


3. Extended closing timeline: Buying a presale also allows for a longer closing timeline, which can

be advantageous for buyers who may not be able to move in right away. This can also provide

more time to secure financing, saving buyers from the stress of having to arrange a mortgage in a

hurry.


4. Customization: Another advantage of purchasing a presale is that buyers may be able to have

some say in the design and customization of their property. Buyers can often choose from a variety

of finishes, fixtures, and layouts to create a personalized living space that meets their needs and

preferences.


Cons of buying a presale:

1. Uncertainty: One of the biggest risks of buying a presale is that the property may not turn out as

expected. Since the property is not yet built, buyers must rely on floor plans and artist's renderings

to imagine what the finished product will look like. There is always the possibility that the finished

product will not live up to expectations, leaving buyers disappointed with their investment.


2. Delays: Another risk of buying a presale is that construction may be delayed. This could be due to

a variety of factors, including labour disputes, material shortages, poor weather conditions &

Pandemics. These delays could leave buyers without a place to live or stuck in their current living

situation for longer than expected.


3. Mortgage Financing: Another challenge of buying a presale is securing mortgage financing. Since

buyers are purchasing a property that has not yet been built, they must jump through more hoops

to secure a mortgage. Lenders may require more documentation or offer less favourable terms to

buyers of presales, which could impact their ability to afford the property.


4. Limited flexibility: Buying a presale also requires a certain level of commitment from buyers.

Once the contract is signed, it is VERY difficult to back out or make changes to the purchase

agreement. This can be challenging for buyers who have a change in circumstances or who decide

they no longer want to purchase the property.


5. Higher cost: One challenge with buying a presale is that, once it has been completed (1, 3 or

even 5 years down the road), it could be worth less than you paid if there is a downturn in the

market. We all assume home prices are going to increase, and eventually that may be true…

however there are always ups and downs in the housing market.


So, what can buyers do to overcome these challenges? One strategy is to work with a reputable developer who has a track record of completing projects on time and to a high standard. It's also important to carefully review all marketing materials and floor plans to get a sense of what the final product will look like. Buyers should also consider the neighbourhood carefully, researching the area to get a sense of what it will be like once the home is completed.


In conclusion, buying a presale can be a smart investment for some buyers, particularly those who are looking for a more affordable way to enter the real estate market or who are interested in customization options. However, presales also come with risks, including uncertainty around the finished product and the potential for delays or challenges with mortgage financing. As with any investment decision, it is important for buyers to carefully consider their options and carefully weigh the pros and cons before making a purchase.

Kelly Hudson
MORTGAGE ARCHITECTS
RECENT POSTS 
Graphic comparing 25-year vs. 30-year mortgage amortization with house and pros/cons lists

Which Is Better - 25-Year OR 30-Year Mortgage Amortization?

By Kelly Hudson • November 3, 2026
When it comes to mortgages, shorter isn't always better! You may have heard that a 25-year mortgage is better than a 30-year mortgage because you'll pay less interest. That's true, but there's more to consider! A shorter mortgage means higher monthly payments. A longer mortgage means lower payments, leaving more money for other things. So, which is better? It depends on your budget, lifestyle, and your future plans. What Is Mortgage Amortization? Amortization is the total time it would take to pay off your mortgage if you made all your regular payments. 25-year amortization: Higher payments, but you pay off your mortgage sooner and save on interest. 30-year amortization: Lower payments, but you take longer to pay off your mortgage and usually pay more interest. Let's Look at an Example: Imagine a $500,000 mortgage with a 4.5% interest rate. 
Reverse mortgage ad with smiling couple, house, flowers, and question marks about using home equity

House Rich, Cash Poor? When a Reverse Mortgage Could Make Sense

By Kelly Hudson • October 9, 2026
For many Canadians, their home is their biggest financial asset. After years of homeownership, they may have paid off most (or all) or all their mortgage and built a lot of equity in their home. The problem: You can own a valuable home and still struggle to pay your monthly bills. You've probably heard the phrase “house rich and cash poor.” This is exactly what it means. For Canadian homeowners aged 55 and older, a reverse mortgage is one option worth looking at. It's definitely NOT the right solution for everyone. But for some homeowners, it can provide extra cash while allowing them to stay in the home they love. What Is a Reverse Mortgage? A reverse mortgage allows homeowners 55+ to access some of the equity in their home without selling it. Unlike a regular mortgage, you don't normally have to make monthly mortgage payments. Instead, interest is added to the amount you borrowed, so the balance grows over time. The mortgage is typically repaid when the home is sold, the homeowners permanently move out, or the last homeowner dies. And one of the biggest misconceptions I hear? The bank does NOT own your home. You do. You stay on title and continue to own your home. The money you receive is also generally tax-free because you're borrowing the money - it's not income. What Does “House Rich, Cash Poor” Look Like? Let's say you've lived in your home for 30 years. Your mortgage is paid off and your home is now worth $1 million. Sounds pretty good, right? But your retirement income may come from CPP, OAS, a pension and your savings. At the same time, groceries, property taxes, insurance, utilities and everything else seem to keep getting more expensive. So, while you may have hundreds of thousands of dollars in home equity, your monthly budget can still feel tight. You have the money. It's just tied up in your house. A reverse mortgage is one way to access some of that equity without having to sell and move. What Could You Use the Money For? There are generally no restrictions on how you use the money. Everyone's situation is different, but I've seen homeowners consider a reverse mortgage to: Pay off an existing mortgage, credit cards or other debts Add to your monthly retirement income Make home repairs or accessibility upgrades so you can stay in your home longer Pay for in-home care Help children or grandchildren financially Cover unexpected expenses or create an emergency fund Depending on the product, you may also have choices about how and when you receive the money. You don't necessarily have to take everything at once. Why Not Just Sell and Downsize? This is usually one of the first alternatives we talk about. Downsizing can make perfect sense—but it's not always as easy or as inexpensive as people think. A smaller home or condo can still be expensive, especially in many BC communities. Then add real estate commissions, legal fees, moving expenses, strata fees and other costs. And there's another part of this decision that has nothing to do with numbers. Your home is more than an asset on a balance sheet. Maybe you've lived there for 30 years. Your friends are nearby. You know your neighbours. Your doctor, family and community are close. Maybe you simply love your home and don't want to move. For many retirees, being able to stay in their home is an important part of their retirement plan. So... What's the Catch? There isn't any free money here. Reverse mortgage rates are typically higher than traditional mortgage rates. And because you aren't making regular mortgage payments, the interest gets added to the amount you borrowed. That means the amount you owe grows over time and the equity left in your home can decrease. There can also be appraisal, legal, setup and closing costs. Depending on the mortgage and when you repay it, there may also be a penalty. And remember—you still own the house. That means you're still responsible for maintaining it, keeping it insured and paying the property taxes. That's why it's important to look beyond the interest rate and understand the long-term costs. What About My Children's Inheritance? This is a conversation worth having with your family. A reverse mortgage will normally mean there is less equity left in your home for your estate. For some homeowners, leaving as much as possible to their children is extremely important. Others look at it differently. They would rather use some of the equity they've spent decades building to make their own retirement more comfortable. And some parents decide they'd rather help their children or grandchildren now , while they're still here to see them enjoy it (i.e. a gifted down payment). There's no right or wrong answer. It's your home, your equity and your decision. Reverse Mortgage or Home Equity Line of Credit (HELOC) ? A HELOC is another way to access the equity in your home. But there's an important difference. With a HELOC, you need enough income to qualify, and you'll need to make monthly payments. That can be difficult for someone who is retired and has a valuable home but limited monthly income. A reverse mortgage works differently because it's designed for older homeowners. One option isn't automatically better than the other. Maybe a HELOC makes more sense. Maybe refinancing makes more sense. Maybe a reverse mortgage does. It depends on your income, age, equity, monthly cash flow and, most importantly, what you're trying to accomplish. Is a Reverse Mortgage Right for You?