OCCUPANCY FEES - THE "PHANTOM MORTGAGE"

When purchasing a pre-construction condominium you will be able to occupy your unit, interim occupancy, before the building is fully complete and the developer is able to transfer legal ownership to you.  During this period the developer may charge the purchaser a monthly occupancy fee.  This occupancy fee is like paying rent as the monies are not paying off your own mortgage.  You are paying the builders expenses which include: interest at a prescribed rate on the unpaid balance of the purchase price, an estimate of municipal taxes and projected common expenses contributed to your unit. 

The only way to avoid paying the full occupancy fee is to pay off the full amount of your unit. Instead you will only pay the common expenses and taxes contributed to your unit.  You can also try to get the builder’s permission to rent your unit out to someone during the duration of interim occupancy.  Do make sure this is specified in a clause in the original purchase agreement.