7) Mortgage
Mortgages Are the Most Complex Part
Get a mortgage on your Calgary pre-construction property is the most important part of your closing and about 90 days before closing, you want to start working on your mortgage. Securing financing is the most nerve-wracking part of buying real estate, and I’ve seen many people scrambling at the last minute to secure financing. Delays in funding a mortgage are by far the most common reason that buyers cannot close on time - don’t let this be you because it will cost you thousands if you need an extension!
Down-Payment Required
You are required to have a minimum 20% down-payment to qualify for a mortgage on a rental property in Canada - there is virtually no way around this.
This means that if you put down a:
5% deposit→ you need an extra 15% at closing + closing costs
10% deposit→ you need an extra 10% at closing + closing costs
15% deposit→ you need an extra 5% at closing + closing costs
20% deposit→ you just need your closing costs
Use Experienced Professionals
It may be tempting to use a friend or family member for your mortgage but I have seen this go wrong countless times. To fund a Calgary mortgage, a mortgage broker must be licensed in Alberta - use a trusted professional that is experienced in funding pre-construction properties to ensure a smooth process!
I work with incredible mortgage brokers that closed countless Calgary deals for my clients and have access to a wide variety of financing options for your needs:
Top 5 A Banks (Scotia, RBC, TD, BMO, CIBC)
B Lenders
Private Financing
Halal Mortgages
Non-Resident Funding
High-Net Worth Qualification
► Request My Preferred List of Mortgage Broker Contacts
Adding Buyers
If you need to add a buyer to your contract or assign to a holding company, request this as early as possible. Making any changes to buyers is considered as an assignment and if requested less than 90 days before closing, expect to have to pay an assignment fee and lose incentives.
Mortgage Qualification
Mortgage qualification has become much more difficult over the last couple of years with banks tightening their requirements and requiring more verifications than previously needed. Be prepared to provide the following for EACH person on the agreement:
Proof of Income
Recent pay stubs (usually last 2–3 months)
Employment letter or Contract > don’t quit, go on sabattical, or switch jobs just before your closing
T4 or T4A slips
Notices of Assessment for last 2 tax years
Additional income sources (bonuses, commissions, rental income)
Proof of Assets
Bank statements (last 2–3 months)
Investment statements (RRSPs, stocks, bonds)
Documentation of other assets (other real estate, savings accounts)
Credit Information
Consent to pull your credit report
Explanation letters for any past credit issues (if any)
Identification
Government-issued photo ID (driver’s license, passport)
Social Insurance Number
Down Payment Verification
Proof of down payment funds (savings statements, gift letters if applicable)
Documentation showing source of down payment > watch out - banks typically want to see the down-payment funds sitting in your account for at least 3 months
Purchase Agreement
Signed agreement of purchase and sale (if buying a property)
Disclosure package
Additional Documents for Specific Situations
Self-employed: Business financial statements, tax returns, profit & loss statements
Rental income: Lease agreements and tax returns showing rental income
Divorce/separation: Court orders or separation agreements (if applicable)
Mortgage Insurance
Most lenders will offer you different types of insurance as part of your mortgage, including:
Mortgage Life Insurance: pays off your mortgage balance if you die before it’s fully paid (click here for more information)
Mortgage Disability Insurance: covers your monthly mortgage payments if you become disabled and are unable to work due to an illness or injury (click here for more information)
I don’t typically recommend getting either insurance because you can often get better and less expensive coverage through an insurance provider but always review with a professional to determine your specific insurance requirements (especially if you don’t typically qualify for coverage).
Mortgage Options
When securing a mortgage, borrowers face several important payment-related decisions that can impact their monthly cash flow, overall interest costs, and how quickly they pay off their loan. Here are the key options people must decide on:
Mortgage Payment Frequency
Monthly: Most common; payments once per month.
Bi-weekly: Payments every two weeks; results in 26 payments per year, which can reduce interest and shorten the loan term.
Weekly: Payments every week; more frequent payments can reduce interest over time.
Accelerated Payments: Paying the equivalent of extra payments to pay off the mortgage faster (e.g., accelerated bi-weekly).
I recommend monthly frequency because the renter will pay you on the first of every month
Amortization Period
The total length of time you take to pay off the mortgage (commonly 25 years in Canada).
Shorter amortization = higher monthly payments but less interest paid overall.
Longer amortization = lower monthly payments but more interest paid over time.
I recommend a 30 year amortization to maximize your cash flow and flexibility - if you have extra cash flow, you can always put it towards your mortgage principle
Prepayment Options
Ability to make extra payments without penalty (lump sum or increased regular payments).
Some mortgages allow prepayments up to a certain percentage annually (e.g., 10-20% of the original principal).
Helps reduce interest costs and loan term.
Prepayment options are nice but not a deal breaker if the lender does not provide them.
Payment Amount
Fixed payment amount over the term (common in fixed-rate mortgages).
Variable payments can change based on interest rate fluctuations (variable/adjustable-rate mortgages).
I prefer variable rates because historically variable rate payments have been lower over time but if you won’t be able to sleep at night then go with a fixed rate - there is no right answer here.
Interest Payment Type
Interest-only payments: Pay only the interest for a set period, deferring principal payments.
Principal + interest payments: Pay both principal and interest every payment.
Nearly every mortgage requires principal+interest so it’s generally not an option unless you’re using a line of credit to finance your purchase.
Payment Method
Automatic withdrawal from a bank account
Manual payments (less common, risk of missed payments).
I strongly recommend using pre-authorized debit to automatically withdraw payments because I guarantee you will forget it about it at some point.
Choosing the right payment frequency, amortization, and prepayment options can save thousands in interest and help you build equity faster. It’s important to balance monthly affordability with long-term goals.
► Request My Preferred List of Mortgage Broker Contacts who can help you with this
