It takes only a drive down the streets of downtown Toronto to notice there are a record number of condo projects on the go in this city. In fact, Toronto has more cranes in the sky than any other city in North America, even four times as many as New York City. This begs the question – does it make sense to jump in and buy a condo before it’s been built?
Many potential homeowners ask themselves if they should purchase a pre-construction condo. If they do a bit of research, they’ll find there are both advantages and disadvantages to buying one of these units. For starters, a purchaser only needs to worry about coming up with a down payment for the time being as the balance of the payment won’t be due until the condo has been built.This will enable you to save more money and sort out the particulars of your mortgage during the construction process. Typically, the down payment is 20%, and is paid in instalments over a 365 day period. Some condo corporations require only a 15% down payment within the first year, and the remaining 5% prior to taking occupancy.
Do Your Research
Since your condominium is being built from scratch, you’ll be able to custom design some of the unit’s elements and pick the finishes – not to mention, you shouldn’t have any type of repair bills for at least 10 years after moving in. And let’s not forget, in many instances the condo may be worth more than you paid for it once it’s built due to the rising cost of real estate in Toronto as well as rising prices due to unit scarcity in the building. On the other hand, if real estate values start to drop in Toronto, it is possible that your condo will be worth less than what you paid for it, which seems pretty unlikely in this marketplace.
Home buyers may find that a mortgage lender will only provide the funds for the market value of the home when it has been completed. If the value is less than the original price you’ll need to make up the difference. If the costs can’t be covered then you could end up forfeiting the deposit money. Before agreeing to purchase a condo, it’s a good idea to do your due diligence on the builder and speak to some of its clients and professionals within the industry in order to confirm this would be a positive investment. A good way to do this is to look for other projects completed by the builder in the GTA in order to see how previous developments turned out.
Construction Delays in Condo Development
Unfortunately, some contractors have a bad habit of missing building deadlines and the last thing you want is to have your new home delayed by a month or two or six. Local real estate agents may also be able to help you out in this regard as well since they may be familiar with the building company. If you’re worried about building delays, you may want to consider purchasing a pre-construction condo which is closer to being completed.
Questions to Ask
There are some important factors that should me made perfectly clear to you before putting a deposit on a condo. It’s essential that you know everything that’s included in the purchase including furnishing, appliances, storage allocations, finishes, and common property. Be sure the builders give you a date when the construction will begin and when the unit will be completed. They should also keep in regular contact with you during the building process to keep you updated on the progress.
It’s recommended that you have an experienced real estate lawyer look over the details, terms, and fine print of the pre-construction contract before committing to anything. It’s also a good idea to enlist the help of a real estate agent and mortgage broker experienced in these types of purchases. These professionals should inform you of the positives and negatives associated with that particular pre-construction condo such as the current state of the real estate market and how it may affect the value of your home once your occupancy date comes around years down the road.
As with all mortgages, home buyers should be on the lookout for the best terms and rates for their particular situation when purchasing a pre-construction condo. This is where the help of an experienced mortgage broker comes in. They will be able to fully explain the entire process of financing your new condo and offer you their professional advice and services. Since each province may have its own specific rules regarding the purchase of a pre-construction condo, it’s highly recommended that you have a mortgage broker take care of all the details and explain each step of the process. Although you will not be able to set up financing until about 120 days prior to the closing date, it is essential that you have a mortgage broker give you the go ahead that you will qualify for financing prior to making any purchases.
Contact us at MortgageMeister.com today if you are interested in learning more about mortgage financing for pre-construction condos in Toronto and the surrounding GTA. As a mortgage brokerage specializing in pre-construction purchases, we can walk you through the entire process from start to finish, and let you rest easy knowing your investment is secure.