Raynor Powell
Sales Representative
m. 647-716-1276
e. citylife@raynorpowell.ca
What to Know Before Buying Pre-Construction
Raynor Powell • February 5, 2019
If you’re not in a hurry to move, buying a pre-construction condo can gain you savings over an existing, resale unit. However, there are important differences you should be aware of.
Your Style
With a new condo, you have choice in the style of unit, interior finishings and colour schemes.
Save Up
While your condo is being built, you have time to build up your savings both for your downpayment and for closing costs.
Higher Down Payment
With a pre-construction condo, you will need to put 15-25% as a down payment. However, this does not have to be paid all at once and is usually spread over a period of time up to closing.
Adjustments
New condos are subject to HST, which is included in the purchase price. You may, however, qualify for the GST/HST New Housing Rebate program. Please discuss this with your tax accountant as you will need to apply directly through the CRA to receive this rebate from the builder. You may also face additional costs at closing, such as utility connection fees and other adjustments.
10-Day Cooling Off Period
When you sign a contract to purchase a pre-construction condo, you have 10 days to review your contract in detail to ensure you agree to all of its terms or to request any changes. Be sure to use this cooling off period to fully understand the terms of your contract.
Rent Before You Own
You may be able to move into your condo before the entire building is complete. In these cases, you pay rent to the developer - known as interim occupancy - until the building is registered and you take title. This ‘rent’ has nothing to do with your mortgage, which doesn’t come into play until you take title ownership, so you should factor in this potential extra expense at purchase. Interim occupancy fees are calculated based on the balance you owe the builder and are usually 1-2% plus the building's insurance and maintenance fees.
Do Your Research
There are many benefits to buying a pre-construction condo, but there are some risks. Your best course of action is to do your research so there are no big surprises. Research the builder - their reputation, history, and experience. Look at the company that will be managing the building and check their credibility and reputation as well.
Note too there are smaller builders with boutique sites who build very well but don’t have enough experience yet to rate well. Sometimes you have to take a risk on the smaller developer to get the right location and size.
As a pre-construction specialist, I’ve worked with many reputable developers in the city and understand the process and what you need to know. I will help you navigate this more complex condo-buying experience.
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