Deposit Structures on Pre-Construction Condos

So you have decided to buy a pre-construction condo, Congratulations! 

Are you ready with your deposits?

Each builder has a different schedule or structure for deposits, but many factors affect the deposit structure. The developer’s bank would be the # 1 factor in deciding a schedule for deposits. The developer needs a mortgage and the bank would demand at least a 15% down payment. This is where your first deposit money will go.

Expect to pay out 15% in 3 to 4 installments over a 6-9 month period after signing the agreement of purchase and sale. At time of occupancy you will pay an additional 5 to 10%. The amount that remains after your 15 to 20% deposit will require a mortgage pre-approval.

The stage of construction at which you buy the condo will also have bearing on your deposit schedule; the earlier you buy a condo the stricter the deposit structure will be. This relates back to the bank the more condos the builder has sold the deposits collected to put towards the mortgage, once the developer has the money from the bank the more flexible the deposit structure will be. WARNING: If you are not a Canadian citizen you will most likely have a significantly higher deposit amount regardless of what stage the condo construction is in.

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