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How to Purchase A Pre-Sale Condo

by | May 15, 2022

How to Purchase A Pre-Sale Condo

How to Purchase A Pre-Sale Condo

How to Purchase A Pre-Sale Condo


Pre-sale condo are brought to the market by a developer before the units are completely built. Buyers can choose to put money down on presales and own the rights to a future home. Buyers still pay the full price, but until the property is complete, the buyer won’t need to take out a mortgage.

The most frequently asked questions about pre-sale condos surround the topic of deposits. When purchasing a pre-sale condo, the first step is to make your deposit on the property. Typically, there is a small initial deposit due at the time of offer, followed by a 5% to 10% deposit on the agreed purchase price. From here, pre-sale condo deposits are scheduled to be made over a specified period, with more large payments being due between your first payment and the date of completion.

Let’s look at a hypothetical deposit schedule for presale condos. Every Pre-Sale Condo contract is different, so this is just an example of a deposit schedule.

-June 1, 2021: You find the perfect pre-sale condo and put down $10,000 upon writing your offer.
-June 8, 2021: After a 7-day rescission period, the remaining 10% of the purchase price is due.
-June 1, 2022: An additional 5% of the purchase price is due.
-December 1, 2022: An additional 5% of the purchase price is due.

At this point, you’ll have a 20% down payment made on the purchase price of your pre-sale condo, which is relatively common in today’s market. Once the building is complete, you’ll be ready to secure a mortgage and move into your new home. Deposits are held in a trust account, and developers won’t gain access to the funds until construction is complete.

While you’ll need pre-approval if you’re buying a pre-sale condo, you won’t need to secure or start paying a mortgage until your property is fully built, with your mortgage loan payments beginning upon final closing. This is when the building is officially registered with your city and when you get the title to your condo.

When it comes to interest rates, you can likely lock in a rate if you’re purchasing a pre-sale condo that will be completed in less than two years. Speak to your bank or mortgage broker and request a commitment letter to lock in rates if you’re trying to secure a mortgage at today’s rates.

Interest in presale properties is high in many major Canadian cities. Many homeowners are interested in selling in a few years but are interested in investing in a property today. Prebuilds also offer the opportunity for new homebuyers to leverage their initial deposit, which has proven to be highly profitable for many investors in the past. These investment opportunities, mixed with the ease of living that comes from moving into a brand-new condo and extended warranty insurance, make presale condos a desirable option for many homebuyers.

The most considerable risk of buying a pre-sale condo is simple: you don’t know what the market is going to look like when your condo is completed. Of course, not knowing what the market is going to do is a risk associated with any investment. If you’re financially prepared for worst-case scenarios and do your research on the area, market, and developer you’re working with, there’s a good chance that the potential benefits of purchasing a prebuild condo outweigh the potential pitfalls.

It is VERY important to have a clear understanding of the implications that may happen if you decide to Purchase a Pre-Sale Condo, and how it can affect you. It makes all the difference in future planning and can impact you in very significant ways.  If you would like to learn more about Pre-Sale Condos and more popular topics, please visit our website or reach out.

At GLM Mortgage Group, we know what questions to ask. We have relationships with the lenders that you know about and the lenders you don’t. We would be pleased to educate you on the financial options available to you. We want you to make the best decision possible on the mortgage that you are committing to. Call us anytime for a FREE consultation on the mortgage products available to you.




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