The deposit structure is the first commitment
Pre-con deposits are staged, commonly fifteen to twenty percent paid in installments over the build period. These payments are fixed contractual dates, and missing one can put the whole contract in default. Map those dates against your savings plan before signing, not after.
You cannot fully finance it until the building exists
A lender will not issue a firm approval years in advance. Rate holds expire, policies change, and your own file changes. What you can do upfront is pressure-test the numbers: qualify yourself at the purchase price with today's rules, then re-run it every year as closing approaches so a problem surfaces early, while there is still time to fix it.
- Re-check your qualification annually, not just at closing
- Keep credit clean and debts low during the build period
- Avoid major job or income changes in the final year
Interim occupancy: paying without owning
Between move-in and final closing you pay the builder an occupancy fee covering interest on the unpaid balance, estimated taxes, and maintenance. It does not build equity and it can last months. Budget for it, because it arrives on top of rent you may still be paying elsewhere.
The appraisal risk on final closing
Your mortgage is sized against the appraised value at closing, not the contract price you signed years earlier. If the market softened and the unit appraises low, you cover the gap in cash. This is the single biggest financial shock in pre-con, and the reason a cash cushion matters more for these buyers than any other kind.
Development levies and closing adjustments
The final statement of adjustments on a new build is long: development charge top-ups, utility hookups, Tarion enrolment, education levies. Capped-levy clauses in your agreement limit the exposure, so have a lawyer review the agreement during the cooling-off period, when renegotiation is still possible.
Frequently asked questions
- Can I assign the contract before closing?
- Often yes if the agreement allows it, usually with the builder's consent and a fee. Assignment sales have their own tax and financing rules, so get advice before listing it.
- What happens if I cannot close?
- You forfeit the deposit and can be sued for the builder's losses if the unit resells for less. This is why the annual qualification check matters: problems caught early have exits, problems caught at closing do not.
- Are deposits protected?
- Condo deposits in Ontario are held in trust and insured under Tarion up to set limits. Freehold pre-con deposits have weaker protection, another reason for legal review at signing.