Buying a pre-construction condo is exciting, there is no doubt about it! There are also some things to consider if you’re thinking of making this move. We’ve laid out first steps to take, what to get excited about, and what you should be watching out for.  

First Steps:

Research the builder

First things first, research the builder. You will want to make sure that your condo is being developed by a reputable builder with a good history. There is nothing worse than a build not going through after you’ve already invested. Take time to look into previous builds and the track record of the developer. 

Research location

Research where the condo is going to be located. Is it in a location where you’ll need a car, or is there an established transit route nearby? The location of where you live can have just as big of an impact on your satisfaction as the condo itself. Take time checking out the neighbourhood to make sure it suits the lifestyle you’re looking for.  

Timeline

Getting clear on the developer’s timeline and making sure it lines up with your desired timeline is important. You don’t want to go into the purchase with one timeline in mind and realize it doesn’t match up with the developers. When it comes to timelines and pre-construction builds flexibility may be required. New builds can sometimes face delays for various reasons and may cause unexpected delays. 

Budget

Like with any purchase making sure your finances are in order is extremely important. Calculate your deposit, your monthly payments, and other expenses to get an accurate working budget. Working with a Relator will ensure that you are able to find something that falls within your desired budget.  

Cooling off period

The cooling off period is a window where the purchaser has an opportunity to review their agreement with a lawyer and has the chance to back out of the agreement with no consequences. Ontario currently has a 10 day cool off period, note this may vary province to province. 

 Get Excited:

Customization

One of the great advantages of purchasing a pre-construction build is getting to pick and choose what you want. This is the ideal opportunity to customize. This is the exciting part where the condo truly becomes your own.

Investment

Deciding to go for a pre-construction build is such a great future investment. While you will be able to enjoy the customization of your condo now, it is also an investment for future resale value knowing that it is only going to appreciate over time.

Assignment

Assignment is essentially the sale of the unit to someone else before the unit is complete. If this is something that you’re considering, it is important to have your Realtor negotiate this option into your agreement from the beginning. 

HST Rebate

Unlike any resale condos, new condos are applicable for a HST rebate. To qualify you must be the principal resident. If you’ve purchased the new build as a rental property, there is a different rebate with different criteria that must be adhered to. Be sure to consider conducting more research or getting legal advice to get the right information you need to capitalize on this opportunity. 

 Watch Out For:

Delays

It is not that uncommon for delays to occur in the building process. And the nature of the beast that comes along with pre-construction purchases is that you can’t see into the future and know what is going to come up. Delays happen for all sorts of reasons, many of them not in the control of the builder.

Interim occupancy

Interim occupancy is essentially when the condo is built, and you are able to move into it without technically owning it. During the interim occupancy period, the buyer is able to live in the unit and pay the approximate amount of their mortgage payment and condo fees. While the buyer is living and paying, they do not technically own the unit as mortgage has been signed or transfer of land has been completed. 

Deposits

One thing to be mindful of if choosing the pre-construction route is that the deposits tend to be larger. The larger deposit is often to secure the funds to complete the build. The deposit may not be all in one chunk, it may be split up in different payments over a period of time. With a new build be prepared to have a larger deposit but know that it typically is not all due at once. 

Development fees 

Development fees are different than your standard closing costs. These are additional fees that are charged on new build projects. You can look at it as kind of similar to a tax by the developer. Your relator will negotiate these fees for you, so you aren’t surprised by them when you close on the property. 

Condo fees 

Condo fees for new builds tend to be low, which is great, but watch out for a price jump. This is generally because planning years in advance doesn’t allow for an accurate reflection of present-day costs of amenities and building upkeep. Be mindful that within your first year or two there is a potential in condo fees to increase to reflect these prices more precisely. 

Closing costs

Don’t forget when budgeting the closing costs to take into consideration. These closing costs come once you officially close on the unit. There is no set cost when it comes to closing costs and it is set out by the builder. Closing costs include things like development charges, land transfer taxes, utility hook ups, various legal fees, and other miscellaneous charges. 

Interested in seeing pre-construction options in your desired city? Head on over to our search page and select the pre-construction filter and register for more information.