12 Pre construction Condo Facts when buying Builder New Condos
Pre construction condo facts for you to keep in mind when buying builder new condos.
1. Pre construction condos are more expensive than resale condos.
When you buy a builder new condo, you are buying something that you will get in a couple of years’ time. What that means is you are paying more than what you would pay for a similar resale condo in today’s condo market place. Builder’s price is based on many factors like land cost, construction cost, future price forecasts etc. Every builder project is different when it comes to the launch prices. Some projects are very investor friendly and others are user friendly. Experienced local brokers are able to help their clients choose the best pre-construction condo builders.
2. You cannot move into your condo quickly, like in the case of resale condos.
There are many buyers who prefer longer closing. It gives them time to save money while their property is under construction. But if you are looking to move into a condo immediately or in the very near future, resale condos in Mississauga are a better option for you. Builder new condos can take anywhere between 2 – 3 years for completion and final closing from the date of their initial launch. The only way you can move into a new builder condo in a couple of months time is if you buy from the builder’s unsold inventory or an assignment sale condo from another buyer. In both these options, you are paying a higher price than the builder’s initial launch price.
3. Buying with 5% down payment is not an option.
Resale condos can be bought with a minimum of 5% down payment. With a pre-construction or a builder new condo, you end up paying up to 20% before the closing. However, this 20% does not have to be paid all at once. A 5% deposit is usually paid within the first 30 days, followed with more installments of 5% each in 60 or 120 or 365 days from the date of builder’s agreement of sale. Having said that, some builders do offer a 5% down payment, when there is unsold inventory left just before the final closing.
4. Your deposit up to $40,000 is protected by TARION.
Good news is that your deposit to purchase a builder new condo is protected by TARION deposit protection program. The maximum limit for this protection is $40,000. What this means is that you will get your deposit, up to $40,000 back should the builder go bankrupt or breach the purchase and sale agreement, or you have a statutory right to treat the purchase agreement as terminated.
5. You are buying from floor plans, and in some cases based on viewing model suites.
When you buy a resale condo you get what you see. You are buying a condo at an existing building. So you can visualize your new home and life at the condo. You also know about the reputation of the building and the performance of the appointed property management company. There are no teething issues that new condo buildings can have sometimes.
6. Your closing cost is higher than resale condos (usually between 2% to 3%).
When you buy a resale condo you know exactly what all you need to pay for and know how much it will cost. Closing costs for builder new condos in Mississauga can be higher than the purchase price that you originally signed for. However, the variance is not very huge. It ranges between 2% to 3% of purchase price.
7. You get a warranty when buying builder new condos.
A definite pro for buying builder new condos is the fact that you get warranty on your new condo that is backed by TARION warranty program. This warranty includes both your condominium unit and the common elements. You also receive brand new appliances with warranties. This warranty is transferable to a new buyer at no cost. Resale condos may or may not have new appliances or warranties for them.
8. You can choose your finishes when buying builder new condos.
This is one of the most exciting factors when buying a pre-construction or a builder new condo in Square One or elsewhere in Mississauga. You get to choose how you want your own unit to look like. You can choose the colour of walls, flooring, kitchen counter top, back splash, and other upgrades throughout the condo suite.
9. Builder prices to buy a new condo keep rising from the date of launch up until all the units are sold.
When a builder launches a new condo project, the prices are the lowest. There are VIP Broker events (My team and I are the VIP brokers at almost every builder new condo project in Mississauga) where the builder offers the best terms and prices to buy a new condo. The prices for the general public is usually higher than the prices at these events. Even if the builder keeps increasing the price to buy a condo at the same project until the time all condos are sold. The builder typically keeps adjusting buying price based on price appreciation. Buying a condo at the right price is a crucial factor especially now that the condo market is thriving in Mississauga.
10. Builder new condos have two closing dates
When you buy a high rise condo suite from any builder, you get two closing dates, the interim closing and the final closing date. You receive your keys on the interim closing date. Your title gets transferred in your name only on the final closing date.
11. You cannot claim Land Transfer Rebate if you are an Investor
Land Transfer Tax Rebate is offered to first time buyers only. The new condo must be your principle residence no later than nine months from the closing date. You will not pay any Provincial Land Transfer Tax if your condo is $368,000 or less. Or in the other words, you will receive a maximum $4,000 land transfer tax rebate, as a first time buyer in Ontario.
12. HST new housing rebate is included in your price
Most builders include HST new housing rebate in your purchase price. But if you are buying a builder condo as an investor, you are required to pay this rebate back to the builder on closing. However, you are able to claim GST/HST New Residential Rental Property Rebate for a builder condo that is equal to or less than $450,000. This is subject to certain conditions.
There are many options available in the builder new condo category
Hope you liked reading our 12 important Pre construction condo facts. If you have any questions, feel free to contact us. There are quite a few new condo projects in the pipeline within the Square One area, Mississauga.
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If you are looking for builder new or resale condos in Mississauga, we can help in securing best prices, VIP launch prices, tenant finding service including rental property management. We also put you in touch with expert condo lawyers who review builder contracts before you firm up your sale and professional accountants who can help file your rental income taxes and HST rebate with the CRA.
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