1. Your average sales rep may not be able to get you the best deal.
Sometimes properties have
exclusive or VIP listings with certain brokerages and agents. They are able to get you the best deals and units because they have first access to the building. For example, Cityscape was given exclusive access to the Downsview Park Freehold Towns
and VIP access to Home Condos
at 48 Power street in Corktown. This means that we have first choice at the units that we want to sell our customers and is not avaliable to everyone. Having a trusted brokerage like that is known for preconstruction in Toronto, like Cityscape is ideal if you are looking for the best deal and unit.
2. Why do you want to purchase in pre-construction and not resale?
There are a lot of reasons why purchasing in pre-construction is the right fit for you.
- Lower price - typically purchasing in pre-construction means that you are able to purchase at below the current value of a similar unit.
- The mortgage doesn't start until you receive title of property or unit meaning that you are progressively paying your downpayment instead of paying up front.
- You get to live in a place that's never been lived in before.
- Choose finishings and upgrades that fit your style and able to make some changes to layouts.
If any of these reasons sound like you, then purchasing in pre-construction may be the right choice for you!
3. Where will you be in 3-5 years?
Typically projects like this can take between 3-5 years to be completed. You don't want to purchase a property that is just big enough for your right now if you are planning on having a family. You want to purchase a property that will be the right size for you and your family at least 5 years down the road so you can live comfortably in it without wanting to purchase a larger unit soon after.
4. What is the deposit structure like?
Typically with construction units in Toronto downpayments are typically higher than the
minium 5% that you can get with a resale condo. These deposits range from 10-25% of the price of the unit. The pricing structure usually looks something like this:
- $5,000 upon signing
- Balance to 5% in 30 days
- 5% in 120 days
- 5% in 360 days
- 5% in 720 days
- 1% on occupancy
While it may seem like a lot to have a 20% downpayment, remember that if you are unable to put down 20% even on a resale property you will have the CMCH insurance tax applied to your mortage - which could be $10,000 or more depending on your mortage amount. It is always ideal to have the 20% downpayment regardless if you are purchasing resale or pre construction. And at least with pre consctruction you have up to 720 days to be able to complete saving for your downpayment while your unit is being built.
6. Tax implications if you are puchasing as an investor
Pre construction projects do get charged HST. However, if you are living in the unit yourself you do quality for an HST rebate when your taxes are do. If you are planing on using the unit as an investor to rent out than you will be subject to the HST without the rebate. For example, a $300,000 unit is about $4,000 in HST which could be a large savings and incentive to purchase in pre consctruction.
7. Projects sometimes get delayed
Builders do their best to be on time, however there are so many moving parts to a condo that there are a wide variety of reasons that a project could be behind schedule. These types buildings are known to be delayed and if the delays are longer than outlined in the agreement you may be subject to compensation. On average, delays have run from 6 months and up to 2 years. It is important to know that the occupancy date may not be accurate and to have a back-up plan if the project does get delayed. If you have any more questions about pre construction in Toronto we would love to answer them for you! Just reach out to us at email@example.com