Pre-construction Condo Mortgage: Cost & Worth

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Buying a condo property or anything that will sustain your living will cost a bunch. And before you purchase a condo, you must earn the mortgage pre-approval. 

If this crucial requirement serves as a new face to you, allow our real estate specialists to explain everything you need to know in this guide. 

What Is a Pre-construction Condo Mortgage?

A mortgage pre-approval is needed when buying a pre-constructed condo. 

The condo developer requires a mortgage pre-approval to ensure that buyers will not default and have the affordability to finalize the property later.

signing of documents

But, as the building comes closer to occupancy or 80%, the builder may lift some financial restrictions. Our experts strongly recommend that you take the pre-approval during the cooling-off period. 

During this time, you would clarify any trouble with finances, and the buyers will have the chance to back out their purchase without any commitment.

What Is a Pre-Construction Condo?

A pre-construction condominium is a unit purchased before or during its construction stage.

An upside about a pre-constitution condo is that you can ensure your brand new home with a small deposit. It usually ranges between 3-10% of the total charge. Not to mention, the mortgage repayments are not included until the closing, which means you only start paying once you get settled in.

high rise buildings

With this arrangement, you get more time to save up for a larger deposit and decrease the cost of your repayments once you begin paying. 

Know the Timing of the Cooling Period

The cooling period is given when buyers have put a deposit down; it is a short time to rethink their decision.

Buyers can take the time to get their finances in order and make sure they are prepared to go and seal the deal with the purchase. They should also have their Agreement of Purchase and Sale reviewed by their real estate lawyer during this time.

And, whether buyers are not or are given the cooling period, the number of days will vary from which location they reside in.

Closing Costs

These are additional expenses that buyers will need to pay for between the time they make an offer and the day that they close the deal. These include the following:

two person talking

You must be prepared to budget and save another 1.5 – 4% of the purchase price of your home to cover their closing costs.

However, when you buy a pre-construction condo unit, the overall price can be even higher. When you buy a new condo, additional fees include:

cozy living room setup

What Are the Factors That Affect the Eligibility to Get a Mortgage?

Of course, when it comes to purchasing and getting good deals, there are always a few factors that affect a buyer’s eligibility and the interest rate.

Credit Score

An excellent credit score becomes essential when planning to purchase a pre-construction condo.

An excellent score is anywhere above 700. Any score below 700 is still plenty enough for a B-Lender.

Income to Debt

Income to debt is a ratio of putting one’s debt service as a percentage compared to their income.

men talking

For instance, if you get a salary of $10,000 per month, and you have a $1000 school loan payment and $2000 as mortgage payments, you are at 30%. This means that 30% of your monthly income covers your debt repayments.

Income History

When you do not have enough income, it becomes more challenging to get a mortgage loan. When you are self-employed [1], your income easily fluctuates yearly.

The standard has made banks use the previous 2 years’ notice of assessments. So buyers can also prepare their income histories before applying for a mortgage loan.


Our condo team hopes that this quick guide on pre-construction condo mortgages has been helpful. As mentioned, people who want to purchase a pre-construction condo need a lot of savings, a stable income, and the determination to want the property.

Instead of being unsure and wasting money, allot time to think about it. You have to make sure it is truly something you need or even want.

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Tal Shelef
Tal Shelef is a know it all when it comes to pre-construction developments Canada Wide. His years of daily research and growing up on construction sites / seeing development sites grow from the ground up at an early age gave him a passion like no other. He uses his knowledge to educate Condowizard’s clients. Have a conversation with Tal and see how much value one phone call may provide you.

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Material on this page is not intended to conflict with buyers/sellers under contract with any brokerage. All information on this site is obtained through online sources and may not be reliable. If there are any changes you’d like us to make on any pages or if you are the owner of a development and would like us to remove your listing, Condowizard & Its owners will comply right away.

We represent you, the purchaser – not the builder. Tal Shelef – Sales Representatives @ iPro Realty.

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