Buying a resale
This is the most straightforward way to buy a condo. Advantages include:
- You can see what you’re buying. You don’t have to imagine how it will look from a floor plan.
- There is no waiting period. You get to move in as soon as you close.
- The math is a lot easier. You can get your mortgage pre-approved right away and calculate your monthly payment based on current rates.
But there are some disadvantages, too:
- If the unit has been lived in for more than a couple of years, you might need to set aside money for renovations.
- You can end up in a bidding war for a good unit in a popular building, and have to drop out when the price goes over your limit. (Selling prices for condos purchased pre-construction from the builder are fixed.)
Buying pre-construction
As you can guess, you are buying a not-yet-built condo directly from the builder before construction begins. This, too, has its advantages:
- You are the first owner of the unit and you get to customize certain things (such as appliances, cabinetry, flooring).
- Pre-construction condos tend to be cheaper because of there is a risk of that the project will be delayed or even called off, but this is not always the case nowadays, especially in certain high-demand areas.
- You have more time to save up for your condo. You pay the builder a series of payments as a deposit. The deposit usually adds up to 20 to 25% of the purchase price by the time of occupancy, depending on the builder’s deposit structure (For Canadians) and 35% for (None Canadians).
- Through investment lens, you enjoy price appreciation for the condo’s full price, while you are injecting a fraction of the price in installments.
- The deposit (down payment) is safe in the builder’s lawyer’s trust account and there is no risk of losing it.
- While you are enjoying the price increase over the years, until occupancy, you won’t have to worry about any mortgage payments, maintenance fees, utility bills or dealing with tenants!
Again, there are disadvantages:
- You are buying based only on a floor plan without seeing the finishes, the layout or outside view of the building.
- Prepare to pay “phantom rent.” You are allowed to occupy your unit when it’s ready, but other parts of the building may still be under construction. Until the building is completed and officially registered as a condominium corporation, you pay the builder phantom rent — you can’t start paying mortgage payments at this stage, because you don’t officially own the unit.
- At the time of closing, you must pay a number of fees to the builder that can be confusing.
At Home Leader, we pride ourselves in being specialists in resale and pre-construction condos for the past two decades. Use our FREE services and we guarantee you’ll like the result and you will join the pool of our happy clients.