If you are considering a pre-construction condo purchase there are many things to look for. Buying a new builder condo is a lot different from buying a resale condo.
Here is a rundown of what to expect:
1. Deposit payment: When you’re buying pre-construction condo, you’d be thinking - how much deposit payment is the builder asking? Typically, developers will ask for a 20% deposit and this is spread over multiple installments over a period of a couple of years. For a first-time home buyer this can be perfect, because you don’t have to pay all of the deposit upfront.
2. Harmonized Sales Tax (HST): You may have to pay HST since new-build condos are subject to HST, however your purchase may eligible for the New Housing Rebate program. More so if you will be moving in after closing. Just check with legal or tax professionals if you are qualified for this rebate.
3. Other charges: There are other fees to be aware of such as Tarion New Home Warranty, utility hook-up fees, occupancy fees, lawyer fees, and development and educational levies, if applicable. Closing costs are different for every pre-construction condo and there’s no set amount of closing costs for every condo.
4. Condo fees: Condo fees or maintenance fees are charged to every condo unit owner for the maintenance of common areas. Condo fees generally tend to rise slowly in the first few years as the building is new.
5. Purchase Price: Pre-construction may look to be more expensive than resale condo. But think about it; you’re buying at current market value for future payback and with gradual deposit payments.
6. Potential delays: There is a risk of potential delays and changes since a pre-construction condo project takes 2 years or more to complete. Plan to move in six months later than the original move-in date but have a backup plan in case delays push into the one-to-two-year mark. Preconstruction can come with surprises so be flexible. But these potential delays and changes may be worth the wait.
7. Home Warranty: All new buildings go through a period of settling in their first few years and may result for instance, minor cracks or nail pops. This will cause blemishes to surface during post-construction but don’t be disappointed. The builder will send someone to fix that since it’s covered in your home warranty. Remember to just follow the process set out by your builder. In Ontario, builders must provide home buyers with a third-party warranty. Another warranty to protect a home owner is the Tarion warranty. For most condominiums, warranty coverage also includes the shared areas of the building, referred to as the common elements.
8. Cooling off Period: What’s great about pre-construction is that you can change your mind. You have ten calendar days to reconsider your decision after the date of signing the agreement to purchase and sale. This is according to Section 73 of the Condominium Act, people in Ontario who buy a pre-construction residence directly from a home builder are granted a cooling-off period. If you decide to withdraw from the purchase agreement, you’ll receive your deposit back with no penalties.
9. Colour selection: Another thing I love about pre-construction condos is that it can be upgraded according to your taste or liking. Part of the appeal of buying a pre-construction condo is the option to select your colours and finishes. You get to pick and choose the upgrades and finishes. Just ask the builder on what are the upgrades available.
10. Amenities: Another reason to go for pre-construction condos is the amenities provided by the building. Many pre-construction condos offer swimming pool, gym, theatre, party room, outdoor recreation area and most of them are conveniently located near neighbourhood amenities. Maybe they are located near schools, shopping centres, public transport, and parks.
Knowing what to expect and doing some homework before buying a pre-construction condo will avoid unexpected surprises.
If you need help in purchasing a pre-construction home, I can help you. Call me at 647-834-9928 or email at [email protected] or visit one of our latest pre-construction projects on our webpage.
Here is a rundown of what to expect:
1. Deposit payment: When you’re buying pre-construction condo, you’d be thinking - how much deposit payment is the builder asking? Typically, developers will ask for a 20% deposit and this is spread over multiple installments over a period of a couple of years. For a first-time home buyer this can be perfect, because you don’t have to pay all of the deposit upfront.
2. Harmonized Sales Tax (HST): You may have to pay HST since new-build condos are subject to HST, however your purchase may eligible for the New Housing Rebate program. More so if you will be moving in after closing. Just check with legal or tax professionals if you are qualified for this rebate.
3. Other charges: There are other fees to be aware of such as Tarion New Home Warranty, utility hook-up fees, occupancy fees, lawyer fees, and development and educational levies, if applicable. Closing costs are different for every pre-construction condo and there’s no set amount of closing costs for every condo.
4. Condo fees: Condo fees or maintenance fees are charged to every condo unit owner for the maintenance of common areas. Condo fees generally tend to rise slowly in the first few years as the building is new.
5. Purchase Price: Pre-construction may look to be more expensive than resale condo. But think about it; you’re buying at current market value for future payback and with gradual deposit payments.
6. Potential delays: There is a risk of potential delays and changes since a pre-construction condo project takes 2 years or more to complete. Plan to move in six months later than the original move-in date but have a backup plan in case delays push into the one-to-two-year mark. Preconstruction can come with surprises so be flexible. But these potential delays and changes may be worth the wait.
7. Home Warranty: All new buildings go through a period of settling in their first few years and may result for instance, minor cracks or nail pops. This will cause blemishes to surface during post-construction but don’t be disappointed. The builder will send someone to fix that since it’s covered in your home warranty. Remember to just follow the process set out by your builder. In Ontario, builders must provide home buyers with a third-party warranty. Another warranty to protect a home owner is the Tarion warranty. For most condominiums, warranty coverage also includes the shared areas of the building, referred to as the common elements.
8. Cooling off Period: What’s great about pre-construction is that you can change your mind. You have ten calendar days to reconsider your decision after the date of signing the agreement to purchase and sale. This is according to Section 73 of the Condominium Act, people in Ontario who buy a pre-construction residence directly from a home builder are granted a cooling-off period. If you decide to withdraw from the purchase agreement, you’ll receive your deposit back with no penalties.
9. Colour selection: Another thing I love about pre-construction condos is that it can be upgraded according to your taste or liking. Part of the appeal of buying a pre-construction condo is the option to select your colours and finishes. You get to pick and choose the upgrades and finishes. Just ask the builder on what are the upgrades available.
10. Amenities: Another reason to go for pre-construction condos is the amenities provided by the building. Many pre-construction condos offer swimming pool, gym, theatre, party room, outdoor recreation area and most of them are conveniently located near neighbourhood amenities. Maybe they are located near schools, shopping centres, public transport, and parks.
Knowing what to expect and doing some homework before buying a pre-construction condo will avoid unexpected surprises.
If you need help in purchasing a pre-construction home, I can help you. Call me at 647-834-9928 or email at [email protected] or visit one of our latest pre-construction projects on our webpage.