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How to Get a Mortgage for a Pre-Construction Condo in Ontario, Canada
February 27, 2025 | Posted by: Nicholas Pratile
How to Get a Mortgage for a Pre-Construction Condo in Ontario, Canada
Buying a pre-construction condo in Ontario is a great way to secure a property at today’s prices while it’s being built. However, the financing process differs from buying a resale condo. If you're considering a pre-construction condo, here’s what you need to know about securing a mortgage.
Step 1: Understanding the Pre-Construction Deposit Structure
Unlike resale condos, pre-construction condos require a staggered deposit structure rather than a lump-sum down payment.
Most builders require deposits as follows:
✅ 5% at signing of the Agreement of Purchase and Sale (APS)
✅ 5% in 30-90 days
✅ 5% in 180-365 days
✅ 5% at final closing
This allows buyers to accumulate their down payment over time rather than all at once. Some builders also offer extended deposit structures to make payments more manageable.
Step 2: Get Mortgage Pre-Approval
Even though your mortgage won’t be finalized until the condo is built, it’s essential to get pre-approved before signing the agreement. Lenders will assess:
✔️ Credit score (typically 680+ for best rates)
✔️ Income & employment stability
✔️ Debt-to-income ratio
✔️ Down payment savings
A pre-approval gives you confidence that you’ll qualify for a mortgage when the condo is ready for closing.
Step 3: Understanding Interim Occupancy
One of the biggest differences with pre-construction condos is interim occupancy—a period before you officially own the condo.
What is Interim Occupancy?
Interim occupancy occurs when your unit is ready for move-in, but the building isn’t fully registered yet. You can take possession, but you can’t secure a mortgage yet.
Instead of a mortgage payment, you’ll pay an interim occupancy fee to the builder, which includes:
???? An estimate of property taxes
???? Maintenance fees
???? Interest on the remaining balance owed to the builder
These payments do not go toward your mortgage principal—they cover the builder’s costs until final closing.
How Long Does Interim Occupancy Last?
Interim occupancy can last anywhere from a few months to over a year, depending on when the condo is officially registered. Once the building is registered, you move into final closing, where your mortgage is required.
Step 4: Secure a Mortgage Closer to Final Closing
Since pre-construction condos take 3-5 years to complete, you’ll need to secure a mortgage 3-6 months before the final closing date.
At this stage, lenders will reassess your finances, so it’s important to:
✔️ Maintain a strong credit score
✔️ Keep stable employment and income
✔️ Avoid taking on new debt (car loans, credit cards, etc.)
Your mortgage broker will work with you to ensure you qualify when it’s time to finalize the mortgage.
Step 5: Prepare for Final Closing Costs
Many condo buyers underestimate closing costs, which can add up. In addition to your mortgage, expect to pay:
???? Land transfer taxes (Ontario + municipal taxes)
???? Development charges (builder-imposed fees)
???? Legal fees & title insurance
???? HST (on investment properties)
Some builders allow you to cap development charges, so it’s important to review your contract carefully.
Step 6: Choose the Right Lender & Rate Hold Options
Since pre-construction condos take years to complete, interest rates may change. Some lenders offer long-term rate holds (up to 36 months) to protect you from rising rates.
A mortgage broker can help you:
✅ Compare multiple lenders for the best rate
✅ Understand builder mortgage requirements
✅ Find flexible financing solutions
Final Thoughts
Financing a pre-construction condo in Ontario requires planning, as you won’t secure your mortgage until final closing. Understanding the interim occupancy period, maintaining financial stability, and working with an experienced mortgage broker will set you up for success.
Contact Mortgages with Nicholas to explore strategies tailored to your needs.
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