Key Takeaways
- 1A pre-construction condo usually means paying deposits in stages for a long time before the mortgage starts, and those deposits come from your own savings, not from the mortgage.
- 2In Ontario, condo deposits must generally be held in trust, and Tarion protects deposits and other payments up to a maximum of $20,000, according to the Condominium Authority of Ontario.
- 3Ontario gives pre-construction condo buyers a 10-day cooling-off period, and it starts once you have received the required disclosure documents.
- 4Before final closing, many buyers move in during interim occupancy and pay the builder a monthly fee, but mortgage payments cannot start until the condo corporation is registered.
- 5In the made-up example, $140,000 in deposits is paid over time before the mortgage on the remaining $560,000 is needed.
- 6Ask your broker to line up your deposit dates with your savings before you sign, and to re-check your income and credit again as closing gets closer.
A pre-construction condo is a unit you agree to buy before the building is finished, and you pay for it in stages: deposits now, the mortgage later. That timing is why the deposit schedule matters, because the deposits come from your own savings and the mortgage only arrives when the building is ready to close.
Many Toronto buyers sign first and ask lender questions second, which can leave them short of cash or short of approval years later. This guide lays out the deposit and closing timeline in plain language, with a clearly labelled made-up example.
Quick answer: Lenders do finance pre-construction condos in Ontario, but the mortgage does not start when you sign. You pay deposits from your own savings while the building goes up, and the mortgage is arranged closer to the day you take ownership. The deposit schedule and the length of the wait decide how much cash you need and when you need it. A licensed mortgage broker can line up your deposits with your savings before you sign, although approval always depends on your income, credit, and the lender's rules at the time.
Below, you'll find how the deposit schedule works, a made-up example, what happens between signing and closing, and five steps to take before you sign.
Key Takeaways
- A pre-construction condo usually means paying deposits in stages for a long time before the mortgage starts, and those deposits come from your own savings, not from the mortgage.
- In Ontario, condo deposits must generally be held in trust, and Tarion protects deposits and other payments up to a maximum of $20,000, according to the Condominium Authority of Ontario.
- Ontario gives pre-construction condo buyers a 10-day cooling-off period, and it starts once you have received the required disclosure documents.
- Before final closing, many buyers move in during interim occupancy and pay the builder a monthly fee, but mortgage payments cannot start until the condo corporation is registered.
- In the made-up example below, $140,000 in deposits is paid over time before the mortgage on the remaining $560,000 is needed.
- Ask your broker to line up your deposit dates with your savings before you sign, and to re-check your income and credit again as closing gets closer.
How a Pre-Construction Condo Purchase Works in Toronto
A pre-construction condo purchase works by paying for the unit in stages while the building is approved and built. You sign the builder's agreement first, pay deposits on the dates written in it, and take ownership only when the condo is finished and registered.
Definition moment: A pre-construction condo (a unit you buy before the building is finished, often before construction has even started) is sold through the builder's own agreement, and that agreement sets your price, your deposit dates, and your expected move-in dates.
In Ontario, money the builder receives from buyers must generally be held in trust, and the Condominium Authority of Ontario says Tarion protects deposits and other payments up to a maximum of $20,000. Anything above that depends on your agreement, so ask your real estate lawyer how the rest is protected.
You also get a 10-day cooling-off period (a short window in which you may cancel the agreement). It starts once you have received the builder's disclosure documents and the buyers' guide, so keep a record of the date you got them.
Stage | What happens | Where the money comes from |
|---|---|---|
Signing | You sign the builder's agreement and pay the first deposit | Your own savings |
Construction | Further deposits are due on the dates in your agreement | Your savings or other approved sources |
Interim occupancy | You may move in and pay the builder a monthly fee | Your income |
Final closing | You become the owner and the mortgage pays the balance | The mortgage, plus any cash still needed |
Bottom line: A pre-construction condo is a long, staged purchase, so plan your cash first and your mortgage second.
If you are new to buying, our first-time home buyer guide for Toronto covers the wider process.
A Deposit Schedule Example With Made-Up Numbers
Example only: these are round, made-up numbers to show the method. They are not real prices or builder schedules, and your own agreement will be different.
Picture a $700,000 condo where the builder asks for deposits adding up to 20% of the price, paid in four steps.
Step | When (made-up) | Example amount | Running total |
|---|---|---|---|
1 | At signing | $35,000 | $35,000 |
2 | About 30 days later | $35,000 | $70,000 |
3 | About one year in | $35,000 | $105,000 |
4 | Near occupancy | $35,000 | $140,000 |
In this example, you have paid $140,000 of your own money by the time the building is ready, and $560,000 is left to pay at closing. That balance is where the mortgage comes in, if a lender approves it.
The real schedule, and how much is due at each step, is set by your builder's agreement. Two things can also change by closing day: your income, savings, and credit may look different after a few years, and the lender's valuation of the unit may differ from your contract price.
Bottom line: Match every deposit date to the place the money will come from before you sign. You can try different prices and down payments in our purchase calculator.
What Happens to Your Mortgage While the Building Goes Up
The mortgage on a pre-construction condo is used at the end of the process, not the start, because you cannot own the unit until the condo is registered. Until then, the builder holds your deposits and you may start paying a monthly fee instead.
Definition moment: Interim occupancy (the stretch when you can move in before you legally own the unit) begins once the city says the unit is fit to live in, and it ends when the condo corporation is registered and you receive title.
- The fee. You pay the builder a monthly interim occupancy fee whether or not you move in, and it covers interest on the unpaid balance, estimated property tax, and projected condo fees.
- No credit toward the price. Tarion says this fee is not credited to the final purchase price of your condo.
- No mortgage payments yet. The Condominium Authority of Ontario says you cannot make mortgage payments until the condo corporation is registered.
- The length. Tarion says interim occupancy can last from a few weeks to a year or more, depending on construction and city requirements.
Definition moment: The Statement of Critical Dates (a page in your agreement that lists when the builder expects to finish your unit and the latest dates it can be pushed back to) tells you how long you may need to plan for.
Timeline | What to plan for |
|---|---|
Signing and cooling-off | Have your lawyer review the agreement, and note the date you received the disclosure documents |
Construction | Pay deposits on time and keep a record of where each payment came from |
Interim occupancy | Budget for the monthly fee on top of any rent you still pay |
Near final closing | The lender checks your income, credit, and the unit again, and your lawyer prepares closing |
Final closing | Title transfers, the mortgage is registered, and mortgage payments begin |
Because dates can move, ask your broker how long a lender will keep an approval open. Our guide to how long lenders hold an approval explains why approvals have time limits.
Bottom line: Your mortgage follows the building, so it comes after the deposits and the fees, and your finances need to stay steady while you wait.
5 Steps to Prepare Your Mortgage Before You Sign
Preparing a pre-construction condo mortgage works best as a short checklist you finish before you sign, not after. Here are five steps, in order.
- Add up every deposit and its date. Take the schedule from the agreement and mark where each payment will come from.
- Ask your broker to test your numbers now. A licensed mortgage broker can estimate what you may qualify for on the balance, so you know the plan can work.
- Plan for delays. Ask what happens to your plan if closing moves back by a year, and read the Statement of Critical Dates closely.
- Budget beyond the price. Closing costs, land transfer tax, tax items on a new home, and the interim fee all add to the total.
- Re-check six to twelve months before closing. Your income, credit, and debts can change, so update your broker early.
Our guides to closing costs in Ontario and the Ontario land transfer tax show what to budget for.
What Toronto and GTA Buyers Should Know
Pre-construction condos are sold across the Toronto area, and the process is the same in each city even though every builder's agreement is different. The dates and the deposit amounts come from the builder, not from the city.
Whether you look in North York, near Scarborough Town Centre, or in Richmond Hill, Pickering, or Ajax, read the agreement closely before you compare prices. Buyers in Ottawa follow the same Ontario rules with different projects.
New buildings estimate their condo fees before anyone has moved in, so the first number may change once the corporation is running. Our guide to how condo fees affect your mortgage shows why even a small change in the fee matters.
Bottom line: In the GTA, compare projects on the full timeline and total cost, not only the price on the brochure.
5 Mistakes to Avoid With a Pre-Construction Condo
These mistakes are common, and each one can be avoided with a little planning.
- Treating a pre-approval as a promise. A pre-approval is a snapshot, and by closing your finances and the lender's rules may be different. Re-check it as closing gets closer.
- Forgetting the money between signing and closing. Deposits, the interim fee, and closing costs all come out of your pocket before the mortgage pays the balance.
- Skipping the lawyer review. Your agreement sets the deposit dates, the closing dates, and what happens if either changes. Have a real estate lawyer review it during the cooling-off window.
- Ignoring the chance of delay. Closing can move, and an approval may expire before it does. Tell your broker as soon as you hear about a new date.
- Assuming the value will match the price. A lender may value the unit differently when you close. If the value comes in lower than your contract price, the gap comes from your own savings.
Useful Resources for Ontario Condo Buyers
Thinking about buying a contract from an earlier buyer instead? Read our guide to assignment sale mortgages in Toronto. To plan your savings, see our guides to down payment rules in Canada and the First Home Savings Account.
Ready to plan? Visit our mortgage pre-approval page or talk to a licensed Ontario mortgage broker.
Frequently Asked Questions: Pre-Construction Condo Mortgages
Can I get a mortgage for a pre-construction condo in Toronto?
Lenders do finance pre-construction condos in Ontario, but the mortgage is used at final closing, not when you sign. Until then you pay deposits from your own savings, and later the lender checks your income, credit, and the unit again. Approval depends on your income, credit, down payment, and the lender's rules at that time, so ask a licensed broker to review your plan before you sign the builder's agreement.
How much deposit do I need for a pre-construction condo in Ontario?
It depends on the builder, because the deposit amounts and dates are set in your agreement. Deposits are usually paid in stages over a long period, and they come from your own savings rather than from the mortgage. Add up every payment before you sign, and ask your broker whether your savings, and the sources behind them, will cover the schedule and the closing balance.
Are my condo deposits protected in Ontario?
Money the builder receives for a condo must generally be held in trust, and Tarion protects deposits and other payments up to a maximum of $20,000. If the builder ends the agreement, the deposit must be returned within 10 days, and Tarion steps in if it is not. Ask your real estate lawyer how any amount above $20,000 is protected under your own agreement.
What should I do if my closing date is delayed?
Read your Statement of Critical Dates first, because it shows the latest dates the builder is allowed to move to. The Condominium Authority of Ontario says that if a builder misses its outside date, you may have a right to cancel within a set window, so speak with your real estate lawyer. Tell your mortgage broker too, because a lender's approval may need to be renewed when the date changes.
When do mortgage payments start on a pre-construction condo?
Mortgage payments begin after final closing, once the condo corporation is registered and you receive title. The Condominium Authority of Ontario says buyers cannot make mortgage payments before that point. During interim occupancy you pay the builder a monthly fee instead, which Tarion says covers interest on the unpaid balance, estimated property tax, and projected condo fees. Budget for that fee in your monthly plan while you wait for final closing.
Should I use a mortgage broker for a pre-construction condo?
A broker can line up your deposit schedule with your savings, estimate what you may qualify for, and re-check your plan as closing gets closer. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763), and its licensed professionals can review the builder's timeline and your finances together before you commit, which is easier than fixing a gap after you have signed.
Disclaimer
This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).
Ready to Plan Your Pre-Construction Condo Mortgage?
lendsimpl's licensed Ontario mortgage professionals can map your deposit schedule against your savings and income, and show what to plan for before closing. Approval depends on your income, credit, down payment, and each lender's rules at the time you close.
FSRA-licensed brokerage #13763
Frequently Asked Questions
Lenders do finance pre-construction condos in Ontario, but the mortgage is used at final closing, not at signing. Until then you pay deposits from your own savings. Approval depends on your income, credit, and the lender's rules at that time.
It depends on the builder, because amounts and dates are set in your agreement. Deposits are usually paid in stages and come from your own savings, not the mortgage. Add up every payment before you sign and ask your broker to review it.
Condo deposits must generally be held in trust, and Tarion protects deposits and other payments up to a maximum of $20,000. Ask your real estate lawyer how any amount above that is protected under your own agreement.
Read your Statement of Critical Dates, which shows the latest dates the builder may move to. Speak with your real estate lawyer about your options, and tell your mortgage broker, because a lender's approval may need to be renewed.
After final closing, once the condo corporation is registered and you receive title. Before that, you pay the builder a monthly interim occupancy fee, which Tarion says is not credited to the final purchase price.
A broker can line up your deposit schedule with your savings and re-check your plan as closing nears. lendsimpl is a licensed Ontario mortgage brokerage (FSRA #13763), and its professionals can review the timeline and your finances together before you commit.
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Disclaimer:This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).
