Mortgage Education

Buying a Pre-Construction Condo in Toronto


buying a Pre-Construction condoConsumers looking at buying a pre-construction condo in the Toronto area need to know that there are additional financial considerations when compared to the purchase of an existing condo. Existing condos only require 5% down, but you need a 20% down payment on a pre-construction condo. The good news is that this 20% is not paid all at once.

How Pre-Construction Condo Payments Work

Builders split the down payment into portions paid as the project progresses. Many builders ask for more money at the beginning of the project to recoup as much as possible so they to repay their debt to their lenders. Normally, the down payment is divided into four payments. When you present your offer you accompany it with a deposit. This deposit is deducted from the first payment which is due 30 days after acceptance. Normally, the remaining three portions of your down payment are due at 4, 9 and 18 months, but this depends on the builder. Some builders will negotiate these payments.

You may be able to arrange it so that it suits your finances, so don’t be afraid to talk about the terms. With over 400 condominium projects underway in the Greater Toronto area, you have many homes to choose from. If the terms don’t appeal to you, keep looking.

Other Costs to Consider

There are other unique costs involved in a buying a pre-construction condo too. It’s important to speak to a professional about condo financing before making any sort of deposits. These include development and education levies, Tarion warranty enrolment fees, occupancy fees, assignment fees and utility hookup fees. Not all of these fees apply in all cases, just make sure that there is a cap amount included in your offer to purchase that limits the total amount. These fees can amount to hundreds or tens of thousands of dollars so a cap is crucial to protect your interests.

Development and education levies

Fees passed on from the City to the developer. In turn, the developer passes them on to the buyer. Developers cannot give you a fixed price on these levies as they do not know how much they are until the City sets them, but they can cover a wide range.

Tarion warranty enrolment fees

These must be paid. Tarion administers the Ontario New Home Warranties Plan Act. This private corporation protects the rights of new home buyers and regulates the practices of builders. Enrolment fees are based on the purchase price of your unit plus HST.

Occupancy fees

Cover the period between when you get your keys and when the entire building is complete and you receive the title to the property. In essence, until everything is legally complete, you are a tenant on the property and pay the builder rent. Occupancy fees are roughly based on the interest amount of the balance outstanding on the property, a maintenance fee and a tax instalment. Ensure this is clearly stated in your documentation.

Utility hookup fees

These may also be charged. Some condo fees include all utilities, cable and internet, some don’t. Be sure to check your contract because even if your fees cover these monthly charges, they may not cover installation.

Assignment fees

May also be applicable if you are buying a condo that someone else originally secured. An assignment is when you purchase the ‘right’ to own a condo that has not reached completion. Also, has not been registered in the Land Registry System. Assignments are popular if a buyer wants a brand new condo without having to wait for construction to finish. Assignment fees can range from $750 to $7,000.

In addition to these fees, pre-construction condo buyers are subject to all the fees that any buyer must pay. Land transfer taxes and lawyer’s fees still apply. If you have questions about financing when buying a pre-construction condo in Toronto and the surrounding GTA, you can contact us here. offers terrific rates and terms when it comes to buying a pre-construction condo.