If you are searching for pre-construction condos for sale in Greater Toronto, then it’s great. The pre-construction condo market in Toronto is steaming at top speed. But before you make any commitment, check out our mini-guide on the matter. That way, you can know what to expect from this model once you commit.
If you are buying directly from a builder, you will be asked to deposit between 15% and 20% of the condo price. Typically, when the agreement is signed, the buyer needs to pay a fixed amount, $3,000, $5000, $7,000, etc. After that, the 5% are deposited within ten or fifteen days. The rest of the deposit can be paid in various installments in agreement with the builder. The point is a big juicy deposit is required when purchasing a pre-construction condominium.
Ten-day cooling-off period
Every buyer gets ten calendar days to reconsider their purchase. During these ten days, the buyer can change their mind and withdraw from the contract. That means they can get their entire deposit back in full.
It is a waiting game.
The builder will let you give you a completion date for your condo, but they rarely complete the condos on time. Builders reserve their right to delay because of various reasons. The postponement can be from six months and sometimes even up to two years.
Change is almost imminent.
Again, builders are given an unfair amount of leeway to change their plans. They can change entire floors, units, layouts, and pretty much anything in between. If you want to know the potential extent of all that, make sure you carefully read your sales agreement.
Condos in new buildings have low fees.
That’s mainly because the builder doesn’t know how much it costs to run the building. So, expect your condo fees to be pretty low in the first two years, and expect somewhere between 10% and 20% increase in the period that comes after.
Interim occupancy period
During this period, the buyer can move into the condo, but no land transfer has happened. Technically, the buyer doesn’t own the condo. But during this period, the buyer pays to the builder an amount similar to the buyer’s mortgage payment, plus the taxes and the condo fees.
Mind the HST
If you plan to live in the condo, then you most likely qualify for an HST rebate. Even if you are an investor, you might qualify for an HST rebate, but a different one. It is advisable to get legal advice that can clear the matter and let you know whether you can get the HTS rebate or not. And if possible, how to get it. The alternative is paying the HTS rebate that can potentially cost you thousands of dollars.
The condo reserve fund (emergency fund)
There is no way around this. Everyone that buys a pre-construction condo needs to pay condo fees for two months to the reserve fund. Typically, this occurs during the time of closing.
Purchasing a pre-construction condo is not as straightforward as purchasing a completed one. But sometimes, that’s the only way to buy a condo in your favorite neighborhood, especially if it is a popular neighborhood. But, with some consideration and flexibility, you can purchase that dream condo and make a home of it.