Buying new construction in Ontario—whether a pre-construction condo or custom-built home—involves different financing considerations than resale purchases. This guide covers deposit structures, builder timelines, and how to navigate the transition from agreement to closing. New Construction Mortgage Basics Buying new construction in Ontario involves different financing considerations than resale purchases. Understanding deposit structures, builder timelines, and the transition from agreement to closing helps you navigate successfully. Whether you're purchasing a pre-construction condo or a custom-built home, the mortgage process has unique elements to master. Pre-Construction Deposits Builders typically require 20-25% deposits paid in installments over the construction period, structured separately from your mortgage financing. Typical Deposit Schedule Initial deposits might be $5,000-$10,000 at signing, then 5% in 30 days, another 5% at 90 days, and final amounts at milestones or interim occupancy. Deposit Protection Tarion Warranty Corporation protects deposits up to specific limits if a builder defaults. Understand coverage limits relative to your deposit amounts. Builder-Lender Relationships Many builders have preferred lenders offering incentives like rate discounts, closing cost credits, or extended rate holds. Evaluating Builder Offers Compare builder lender offers against open market rates. Sometimes incentives are genuine savings; other times, you can do better independently. Extended Rate Holds New construction timelines require longer rate protection than standard 90-120 day holds. Some lenders offer 6-12 month or even longer holds for new builds. Closing Cost Surprises Development Charges Charges passed through from the municipality can add thousands to your closing costs. Utility Connections Meter installation and connection fees may be additional closing expenses. Adjustments and Upgrades Final prices often exceed initial agreements due to upgrades, lot premiums, and adjustments. Budget conservatively. Interim Occupancy (Condos) Condo buyers may move in before building registration, paying occupancy fees without building equity. Understand this period's costs and duration before purchasing. What's Next Custom builds require construction mortgages with different structures—funds advanced in stages as construction progresses, then converting to traditional mortgages upon completion. New homes include HST in the price, but rebates are available. Understand rebate eligibility and how it affects your final costs. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions How long do I have to lock in rates for new construction? Standard rate holds are 90-120 days, but new construction often requires 6-12 months or longer. Some lenders specialize in extended rate holds for new builds. Are builder-preferred lenders always the best option? Not always. Compare builder lender offers against open market rates. Sometimes the incentives are real savings; other times independent lenders offer better deals. What is interim occupancy for condos? The period between when you can move in and when the building is registered. During this time, you pay occupancy fees (similar to rent) without building equity. How much extra should I budget for new construction closing? Budget 3-5% of purchase price for development charges, utility connections, upgrades, and adjustments beyond your base purchase price.
