How Does Buying a Pre-Construction Home Work in Canada? A Guide by Richard Wang, Toronto Realtor
Are you considering buying a pre-construction home in Canada? As a trusted Toronto realtor specializing in the GTA real estate market, I’m here to guide you through the process. Pre-construction homes offer unique benefits, but they also come with specific considerations. Let’s break it down step by step.
Why Buy a Pre-Construction Home?
Pre-construction homes are an excellent choice for buyers looking for modern, customizable living spaces. Here’s why:
- Brand New Property: Enjoy a home that’s never been lived in, with the latest designs and technologies.
- Customization: Choose finishes, countertops, and layouts to make the home truly yours.
- Lower Maintenance: New homes typically require fewer repairs compared to resale properties.
- Flexible Payment Schedule: Spread your deposit over several months or years, giving you more time to save.
How Does the Payment Schedule Work?
Unlike resale homes, where deposits are often due within 24 hours, pre-construction homes offer a more flexible payment structure. Here’s what to expect:
- Initial Deposit: Typically around $3,000 when you sign the agreement.
- Staged Payments: Additional deposits (e.g., 5% at 30 days, 5% at 90 days, 5% at 180 days, and 5% at occupancy).
- Total Down Payment: Usually between 20% and 25%, spread over time.
Pro Tip: The deposit structure is often negotiable. If the builder’s schedule doesn’t work for you, discuss alternatives with your Toronto realtor.
Mortgage Rules for Pre-Construction Homes
While mortgage rules for pre-construction homes are similar to resale properties, there are key differences:
- Mortgage Stress Test: You’ll need to pass the stress test, just like with resale homes.
- Uncertainty in Rates: Mortgage rates at closing may differ from current rates, adding some unpredictability.
- Appraisal Timing: Lenders appraise the property when it’s nearly complete (around 97%). If the appraised value is lower than the purchase price, it could affect your financing.
Why Work with Richard Wang, Your Trusted Toronto Realtor?
Buying a pre-construction home can be complex, but you don’t have to navigate it alone. As an experienced GTA realtor, I’ll help you:
- Understand the Process: From deposits to closing, I’ll explain every step.
- Negotiate Terms: Ensure the payment schedule and contract work in your favor.
- Stay Informed: Keep you updated on market trends and builder reputations.
Richard Wang 