Investing in a pre-construction condo is a huge financial undertaking. First, since its not built yet, your purchase is based on the conceptual understanding of what your unit and the overall building will look like. Not to mention, buying a condo is nothing like buying a freehold property, since you will also be paying for common amenities, upkeep, and maintenance. This is why you need to take all the facts into consideration before you commit and educate yourself so that you can make an informed purchase when looking for condos for sale in Toronto. Unfortunately, pre-construction condos are surrounded by a plethora of myths that cloud the minds of uninformed buyers. If you are second-guessing buying a pre-construction condo, we will try to bust a few most common myths to clear your mind:
1. They’re Not Affordable
The commonly accepted fact that an average couple or individual cannot afford to buy a condo in downtown Toronto is completely baseless. In fact, what many people don’t know is that purchasing a condo is a much more economically feasible option than investing in a freehold home, especially in the heart of Toronto. The stark reality for markets such as Toronto is that single-family homes have become unaffordable, pushing many first-time buyers into the condo market, which is actually a much more feasible option for these buyers, due to the abundance of supply. If you want to determine affordability, you can check out the sales center or the website for the condo development you are looking in. Look for the affordability calculator on the developer’s website or ask the sales center staff present you with suite options that cater to your budget and requirements. In order to get an accurate idea of how much you can spend, make sure you know your monthly debt payments, monthly income, the amount you have available for a down payment, and other financial stats.
2. You will Keep waiting for your Condo to be Ready
We have often heard people saying that those who purchase a condo in its planning and development stages will die before stepping foot into their units. While sadly, people have fallen victims to scams, this is not true in most cases. Especially if you conduct diligent research to find the most reputable builder with a solid track record. While unforeseen circumstances can cause delays that are beyond the builder’s control, such as poor weather conditions or labor strikes, the most professional condo builders will always make sure not to stray too far from the development timeline, no matter what happens.
3. You Have to Pay A 20% Deposit
For a Canadian buyer, a typical deposit of 20% of the purchase price has to be paid at the time of booking a pre-construction condo suite. Now for a $500,000 suite, 20% amounts to a lot of cash, especially when to pay it upfront. Fortunately, trusted and quality builders never ask for a lumpsum payment. Instead, they spread out this payment over a period of time. Even though the Condominium act sits in place to protect your deposit, you should always ask the builder if they have any other approvals and rules in place to ensure the safety of your deposit.
4. Your Deposit Would Disappear in Thin Air If the Developer Folds
Even though the cases have been too few, its not unheard of for a developer or two to file for bankruptcy. This used to deter most people from investing in a pre-construction condo. This is why the Ontario government has regulated the Tarion Warranty Corporation to offer protection to all buyers. All reputable developers now include the Tarion Warranty Corporation enrollment fee as part of the overall purchase fee that offers up to a maximum of $20,000 deposit protection. This ensures that in the unfortunate circumstances that the condo project is not completed, the buyers will not incur a major loss.
4. You Never Know What You’re Going to Get
If you are purchasing a pre-construction unit form a respected developer, you won’t meet any surprises down the road. You will inevitably get what you were promised. Before you decide, it’s prudent to explore the presentation suite at the developer’s office in detail, and closely scrutinize the amenity renderings, the finishes, the floorplans. You can ask the developer to show you around their other finished projects to get a better idea of their works to see if they suit you. A trusted builder with years of experience under their belts would help make sure that the suite you’re purchasing,will align with your vision.
5. You’ll Get A Surprise Bill at the End
People often fail to calculate the total cost of ownership when looking for condos for sale in Toronto, which somehow surmounts the deposit and mortgage payments. You also need to factor in the utilities,property taxes, and the maintenance fees. Not to mention, you need to add the closing costs to the total, which includes the administration fees, development levies, warranty fees, legal fees, meters, and transfer taxes. A reputable builder will never hide any closing costs from you and would strive to include any extra fees into the price of the suite so that they can be included in your mortgage payments.