Pre Construction Overview

Within the last few years the prices in the Toronto housing market have risen to an amount where a single family detached home may not be financially attainable for some. Having to meet the Mortgage stress test requirements, 20% as a downpayment right away are some of the barriers to entry in that market. Pre-construction is a great way for younger demographics to enter the market by meeting the deposit structure of a unit, all while not carrying a mortgage and gaining the appreciation of the real estate market over the time that the project is built.
In Toronto the Pre Construction market is very exclusive to certain agents. In order to secure units for clients the realtor needs to be considered a platinum agent or a VIP agent with the developer on the projects. Therefore, it's very important to choose the right realtor when making a pre construction purchase. 
Understanding the process of suite selection and allocation is key to choosing the right unit and receiving your first choice. When a new project is launched the developer will first allow its friends and family to purchase units in the building. Once that happens the remaining units in the building are allowed to be sold by VIP agents. This is the window that we will be able to secure you a unit, and this is the time that you are purchasing units below what the public will pay for them. 

The Pre Construction Process

Please see the infographic below for more information on the process:
The Pre Construction Purchase Process
1. Submit Your Worksheet
Once you have determined a specific project of interest, your next step is to pick the desired suite and submit a worksheet. A worksheet is a document submitted to the builder/developer indicating your suite preferences, along with a copy of government-issued identification to specify that you are interested in securing a suite. The sooner the worksheet is submitted, the better your chances of getting your preferred suite allocated to you. Depending on project popularity, developers will often receive hundreds or thousands of worksheets for the same suite. Suites are typically sold on a first-come, first-sale basis. Working with an agent like me, who has Platinum Access to the best developers, projects, and suites throughout the GTA will give you priority selections before the public, as well as before other agents who do not have these developed relationships.
2. Signing the Agreement
Once a suite is allocated to you, you will be designated a "signing date" to secure and sign the Agreement of Purchase and Sale. You will need to bring your chequebook and government-issued identification.
3. 10-day Cooling Period
When purchasing a new pre-construction property, by law, you will have ten calendar days to complete due diligence and review the Agreement of Purchase and Sale. This time frame is known as the "10-Day Cooling Period." During this period, we recommend having the Agreement reviewed by a lawyer that specializes in pre-construction. Upon review, if you decide to withdraw from the purchase during the 10-Day Cooling Period, your cheques will be returned to you without any penalties.
Typical Deposit Structure
$5,000 Bank Draft on Signing
Balance 5% in 30 days
5% in 180 Days
2.5% in 365 Days
2.5% 540 Days
5% occupancy
Deposit Structure For $750,000 Condo
Purchase Price
Deposit Structure
Balance 5% in 30 days
5% in 180 days
2.5% in 365 days
2.5% in 540 days
5% occupancy
Once you've purchased your unit and have completed all the necessary forms going forward you need to pay the balance of the deposit structure as time goes on, there's no mortgage needed and you have time on your side to generate the appreciation of the market till the condo is built.  
Moving closer to Occupancy here are some options to consider below:
  • Close on the Unit (Pay the closing costs) Acquire a mortgage
    • Rent the Unit.
    • Live in the Unit.

  • Assignment of the Unit
    • 1 year before occupancy the builder will allow you to sell the original contract that you had.