2.Are there strategies to reduce the required down payment or secure better mortgage terms?

You can buy a rental house, put $60,000 down and you will have to get a non-recourse loan for the rest of the mortgage.

As far as the sale of a property with a mortgage on it, that all gets sorted out at close. ie, you bring your money, the bank gets what they have coming, the realtor gets what they have coming (if there's one involved) and the seller gets the rest.

You can often get better rates with a national lender, but the customer service is non-existent, communication probably sucks, they may ask for the same documents multiple times, etc.

The new property has to make $50k plus $12k/yr more than the existing property just to break even.

Exactly the reason to have an Architect on your team to join in on these conversations ESPECIALLY in existing renovations in older homes.

I'd look for mortgage brokers in Canada. 

Just want to mention that sometimes it works out better to raze an existing property down to like 2 studs and rebuild around it so that it still is classified as a remodel versus a complete new build. 

My firm has several lenders who can seamlessly close in 15 days on 'traditional' mortgages at/below market rates and we've been doing so for a couple of years now. 

Tenant is profusely sorry and stays in contact, but that does not pay the mortgage.