What to expect after the contract is signed: Deposits, down payments and move-in

You’ve bought a pre-sale home — congratulations! But the question “now what?” may naturally cross your mind. Closing the purchase of a pre-sale home can feel intimidating to even the most seasoned homebuyer. There are a few areas everyone should be familiar with, so all the boxes are checked to reduce any homebuyer anxiety.

Below is a review of some simple steps you’ll need to take to ensure a smooth transition into your pre-sale home, so you can focus on the excitement of new homeownership.

1. Submit a deposit

Once your offer is accepted, you’ll be asked to submit a deposit that holds the home while you execute your final due diligence. Deposits are typically five to 10 per cent of your unit price, although deposit and payment structures vary based on the development. This deposit is safeguarded by what’s called a rescission period. For a period of seven days, your pre-sale home is secured for you. During this time, you reserve the right to cancel the purchase before those seven days are up. This period is where you double-check all important details such as financing before officially sealing the deal.

Most deposits are designed in a graduated deposit structure, which is an installment payment schedule. However, not all deposit payments follow the same schedule and amount breakdown. Different developers may use individualized structures according to what is best for the seller and the purchaser.

2. Speak with a lawyer or notary

A real estate lawyer or notary will help you with the finer and final details of your purchase. They arrange the transfer of funds between yourself and the development and ensure that all legal matters are handled correctly. They also ensure that you fully understand your contractual obligations and the obligations of the developer.

3. Secure your finances

It’s important to note that the pre-sale deposit does not necessarily negate the need for a down payment. Paying a deposit to the developer and paying a down payment to qualify for a mortgage loan can be two unrelated pieces, as a mortgage lender may request additional funds outside of the pre-sale deposit. Pre-sale purchasing can require different budgeting than resale homes. The good news is, when purchasing a pre-sale, mortgage payments do not begin until the building is complete and the new owner can take possession.

Because deposit payments vary in their structure and schedule, understanding the terms and timelines of your pre-sale purchase is critical. Ensure your realtor, agency or developer will notify you when key payments are due and that your calendar is set to remind you. For more in-depth information about deposit structures, look to your realtor to discuss your options and opportunities.

While you likely would have been pre-approved for financing ahead of time, now is the time to reconnect with your mortgage broker to ensure that this specific purchase is approved. Let them know if you’ve had any changes in income or purchasing power. Once your mortgage is approved, make note of the deposit and payment schedules and be prepared to fulfill your financial obligations.

4. Execute the walkthrough

A deficiency walkthrough is the crucial last step in your homebuying process before you obtain ownership of your pre-sale home. This is usually your first opportunity to see your nearly ready new home. Prior to completion, you should receive a “Notice of Completion Date” from the developer’s agent. This typically occurs 10 days prior to completion, but timing can vary.

After the walkthrough, you will be presented with a list of any noted deficiencies for you to acknowledge. Usually, the developer will then fix these issues before your move-in date. It is always recommended that you bring your realtor along to review the list with you prior to signing.

5. Take possession and move into your new home

After the deficiencies are addressed, your new home will be ready for you. A few days prior to the established possession date, reconnect with your lawyer or notary to finalize the transaction. They will register the property to your name and your mortgage will begin. With these final details, you can accept the keys to your new home. Enjoy seeing your pre-sale vision come to life and get ready to move in!

Professional advice

If you have any questions about the process from purchase to possession of your pre-sale home, speak with your real estate agent or a sales centre representative associated with the development in which you are looking to buy. Both of these professionals can provide tailored information for your specific purchase.