Buying A Pre-Construction Condo In Toronto? Things YOU need to know!
1. The Deposit – Builders require 15-20% down with additional 5% payments until closing. Deposit structure is negotiable closer to closing with the help of a realtor or lawyer.
2. The 10-Day Cooling Period – Buyers get 10 calendar days to reconsider purchase and get deposit returned without deduction. During which time a Buyer should arrange to get financing pre-approval and lawyer review.
3. The Wait – Delays on completion can extend anywhere from 6 months – 2 years after the expected completion date. A realtor can help inform you on details so that you are protected.
4. The Changes – Builders may make drastic changes to layouts and floor plans even after selling. Buyers are protected from material changes. A realtor can help you determine what is considered “material”.
5. The Interim Occupancy Period – Buyer can take possession, but does not yet own condo and pays builder an amount roughly equal to mortgage payment + condo fees + taxes will equal. No transfer of land, no mortgage given yet.
6. The Condo Fees – Fees are estimated years in advance, without knowing real costs of running the building. Condo fees can potentially increase 10-20% during the first 2 years.
7. The Registration – Taking ownership and mortgages coming into effect. Registration can take anywhere from 3 months – 2 years, but usually takes 4-8 months after interim occupancy period.
8. The Closing Costs – Builder adjustments include development and education costs, HST on appliances, utility connections fees – can easily amount to 1-3% of original purchase price. Put money aside for these costs.
9. The Reserve Fund – 2 months condo fees to the ‘emergency fund’ at time of closing in the event an emergency happens, and repairs/extra maintenance is needed in the condo.
10. The HST – Investors can pay up to thousands of dollars in HST upon closing, but end-users may qualify for HST rebate. Legal/realtor advice can help you determine whether you qualify before you buy a condo.
The expert advice of a knowledgeable realtor can save you tens of thousands of dollars on a pre-construction condo!