Financing works a bit differently when purchasing a pre-construction condo compared to buying resale. Generally speaking, you need a down payment of 20% to secure your unit.
A condo selling for $500,000 in Toronto requires a deposit of $100K. Some investors may not have $100K available at once. The good news is condo developers offer a more approachable path to those willing to buy pre-construction condo. A typical arrangement breaks that 20% deposit into installments paid over the construction period with a final payment at occupancy.
Although every contract is different, the deposit structure may be as follows:
This makes a total of 20% of the purchase price. Upon the condominium finishing construction and the Agreement of Purchase and Sale being completed, the mortgage on the new unit would now be the remaining 80% of purchase price.
5% at occupancy
5% of the purchase price within 365 days
5% of the purchase price within 120 days
5% of the purchase price minus the initial deposit within 30 days
$5,000 with the offer