How do gradual deposit work when buying a pre-construction condo?
How do gradual deposit work when buying a pre-construction condo?
For the purchase of a pre-construction new condo, as we know a condo can be expensive, do not be discouraged by the price, because the payment structure will allow you to afford the condo of your dreams.
If you have not yet chosen your condo, a wide choice is offered here. Choose yours and start the process to get your own condo.
Remember that buying a condo is not done in just one step and no return. You surely know that there are 7 steps for the purchase and these steps allow you to secure the transaction and properly examine your decision. If you do not know what these steps are, read our article on this.
After choosing the project and the unit that suits you, and after filling out the Suite reservation form, you will sign a preliminary contract.
After this date, the 10 days cooling off period will run, during which you can have a closer look to the ins and outs of the transaction, as well as the contract and the corresponding documentation. More details about this in this article.
After these 10 days, on the 11th day, if you have not expressed any objection or desire to withdraw from the contract, it automatically takes effect. And the first downpayment that you paid will be cashed.
In general, depending on the builder and the project, the downpayment is not the same, but it is between 5% and 20% of the price of the unit. But most builders charge 20% in advance of the price of the unit. However, this 20% is not required in a single payment, but can be split into installments and the due dates are agreed beforehand.
Here is an example
Let’s say that the price of a suite is $350,000 and the builder asks a downpayment of 20%, and he can give you up to 540 days to pay the downpayment and the remainder would be the mortgage loan.
The downpayment would be 20%*$350,000=$70,000, and is split as follows when it comes to the payment:
- $2,500 down at the signature of the offer,
- $15,000 (balance of 5%) within the 30 days after the signature,
- $17,500 (5%) within 120 days,
- $17,500 (5%) within 270 days,
- $17,500 (5%) within 540 days.
In the end, you will have paid $ 70,000 in all as a downpayment and $ 280,000 will remain to be paid by mortgage until the construction ends. This simulation is just an example, but it may be that the constructor gives you more or less affordable terms than this one.
Some builders can charge around $ 2,500 at the signature, then the remaining 5% after 30 days of signing the contract, and the remaining 15% when you occupy the unit. The structured payment structure has been made to make your life easier as a buyer.
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