What You Need to Know About Buying Pre-Construction in Toronto

Toronto’s pre-construction market has long attracted both investors and end-users who want to get into the real estate game early. With rising resale prices, buying a unit before it’s built can be a smart move—but only if you know what you’re signing up for.

In this blog, we’ll walk through the pros, cons, key terms, and steps you need to understand before buying a pre-construction home or condo in Toronto in 2025.

Why Buyers Choose Pre-Construction

1. Lower Initial Costs Pre-construction purchases require a series of deposits instead of a full mortgage right away. This staged payment structure gives you time to save while the property is being built.
2. Customization Options Buyers often get to choose finishes like flooring, countertops, and cabinetry. Some developers even allow minor layout changes (for a cost).
3. Potential for Price Appreciation If the market rises during the years it takes to complete construction, your property may gain value before you even move in.
4. Everything is Brand New You’re the first owner, which means new appliances, energy-efficient systems, and less wear-and-tear maintenance in the first few years.

But It’s Not Without Risks

1. Delays Are Common Completion dates often shift—sometimes by months or even years. Weather, permits, or supply chain issues can all slow progress.
2. You’re Buying on Paper You won’t see the finished product until closing. What’s in the showroom may not be identical to your actual unit. Be sure to review floorplans and upgrade options carefully.
3. Higher Closing Costs Unlike resale homes, pre-construction buyers in Toronto must budget for:

• Development levies
• Utility connection fees
• Tarion Warranty enrollment
• HST (for some buyers)

These can add tens of thousands to your final price.

4. Assignment Rules Vary Want to sell before taking possession? That’s called an "assignment"—but not all builders allow it, and those that do often charge fees.

Key Terms You Should Know

• Interim Occupancy: You may move in before officially owning the unit, especially in condos. During this period, you pay an occupancy fee (like rent) until final closing.
• Deposit Structure: Most builders ask for 15–20% spread over 12–24 months.
• Cooling-Off Period: You have 10 days in Ontario to review your purchase agreement with a lawyer and walk away if you change your mind.
• Tarion Warranty: Covers certain defects and delays. Read the coverage details.

➡️ Tip: Always have your Agreement of Purchase and Sale reviewed by a real estate lawyer.

Steps to Buying Pre-Construction

1. Work with an Agent Experienced in Pre-Construction Not all realtors have the same access or knowledge. VIP agents may get early access to pricing and unit selection.
2. Visit the Presentation Centre Ask to see floorplans, finishes, and model suites. Take photos. Don’t feel pressured to sign immediately.
3. Review the Agreement Carefully This legal document outlines your rights and obligations. It’s long and detailed, so take your time.
4. Secure Financing Early Although you won’t need a mortgage until final closing, some lenders offer pre-approvals for pre-construction timelines.
5. Prepare for Closing Costs Set aside extra funds—2–5% of the purchase price—for additional fees.

➡️ Tip: Get closing cost estimates in writing before you commit.

Final Thoughts

Buying pre-construction in Toronto can be rewarding—but it’s not the same as buying resale. It requires more patience, planning, and professional support. If you’re looking for long-term growth or want to design your dream space from the ground up, this could be the right path for you.

Just make sure you go in with eyes wide open.