Buying a condo great way to start your journey towards home ownership, but there can be pitfalls. Here are our top tips for buying a pre-construction condo.
What are some of the benefits of buying a condo? In short, they’re less maintenance, have more amenities and are generally less expensive than houses or townhomes (at least in the GTA!). But buying a pre-construction condo has some particular considerations you need to know, that differ from purchasing a resale condo.
If you’re thinking about buying something that’s still in the planning stages, here’s what you need to know about buying a pre-construction condo in the Greater Toronto Area.
A higher deposit
When buying a pre-construction condo, be prepared to pay the builder a larger deposit. While resale condos demand a deposit of 5% upon signing the agreement, pre-construction condos command deposits as high as 15 or 20% to fund the project.
Plan for delays
Although builders give an expected completion date for a condo, in most cases, meeting the deadlines is usually a challenge. And sometimes, builders can delay a condominium for six months to two years.
In Ontario, new condo buyers have a 10-calendar-days cooling-off period to reconsider their decision to buy a condo. In this period, you can either proceed with the purchase or back out from the purchase without any charges. The cooling-off period also provides a chance to get financing pre-approval and have a lawyer review the contract.
Registration of the condo
After a condo is complete and passes the relevant city inspections, it is then registered. Registration takes between three months and two years. During this period, buyers become the owners of the condo, and mortgages take effect.
When purchasing a pre-construction condo, be ready to pay closing costs. Builder closing costs apply to new construction projects and do not apply to resale units. They amount to 1-3% of the purchase price and include utility connection fees, development and education expenses, and HST on appliances.
In addition to closing costs, you have to pay for HST for your new condo. In that context, there are HST rebates for both end-users and investors. Ensure you confirm with your lawyer if you qualify for rebates before you purchase a condo.
A pre-construction condo is among the most excellent ways to own a home without stressing yourself over upkeep. Get in touch with us and we will assist you in getting started.