Tag Archives: pre-construction condos
Pre-Construction Condo Deposits and Fees Explained
As housing prices creep ever higher, and with serious supply constraints across the GTA, it is no surprise that prospective home-buyers are increasingly considering Pre-construction condos.
Pre-construction condos are units in projects that are yet to be built, as opposed to “ready” condos that are already built but have never been sold before. “Resale condominiums” are units that have been lived in already, typically in older buildings, and are up for sale by a current owner.
Due to the promissory nature of pre-construction projects, the fee structures can be a bit more complicated compared to resale condos.
This article will shed light on the most common deposits and fees buyers need to be aware of when buying a pre-construction condo.
Down-payment & Deposits
Generally, pre-construction condos require a higher down payment than resale condos. Whereas a 5% down payment is the norm on resale units, pre-construction units usually require 20% or more in down payments.
At first glance, this may seem prohibitive for many buyers. That is why developers offer what is known as a “deposit structure”, which is basically an installment plan for the down payment.
A typical deposit structure for a 20% down payment would look like this:
- $5,000 with the offer
- Balance of 5% due in 30 days
- Next 5% in 90 days
- Next 5% in 180 days
- Final 5% at occupancy
This makes it much easier for a buyer to arrange and afford the down payment, since its broken up over many months.
Many developers even offer limited-time, pre-launch deposit structures that are even more buyer-friendly e.g. split over 365 days instead of 180 days.
(Competition for these pre-launch “VIP” incentives can get pretty intense, so signing up for a program like our Insider’s Club is always a great idea!)
Deposits tend to be higher at the beginning of a project, as banks and lenders that finance these buildings usually set that out as a requirement. Closer to completion, deposit structures tend to be more flexible, and it is usually possible to negotiate a fee structure with the builder to extend or even reduce your payments.
After putting down a deposit on a pre-construction condo, buyers are entitled to a “cooling off period” – a short period of time to reevaluate their purchase decision. In Ontario, the cooling off period is 10 days.
This is when buyers should get their finances in order and make sure they are ready to go ahead with the purchase.
They should also have their Agreement of Purchase and Sale reviewed by a real estate lawyer, so that they are not caught by surprise by builder-specific clauses.
If a Buyer changes his/her mind (for any reason) during the 10-day cooling off period, he/she can back out of the contract and have the deposit returned without deduction.
Closing costs are additional expenses that buyers need to pay for, which are levied between the time that they make the offer and the day that they close.
These costs include home inspection fees, legal fees, land transfer taxes etc.
It is suggested that buyers budget and save an additional 1.5% – 4% of the purchase price of their homes, in order to cover these closing costs. For pre-construction condo units, that number can be even higher.
When you buy a new condo, you may be subject to additional fees, including:
- Development and educational levies ($200-$4,000)
- New Home Warranty Plan enrolment fee ($900-$1,200)
- Utility hook-up fees ($50-$500)
- Assignment fees (if you sell before final closing, or flip your unit) ($3,000)
- Occupancy fees
These additional costs are project- and builder-specific, and some may even be included in the sale price of the unit (e.g. see HST below).
During the cooling off period, buyers should have their lawyer review the Agreement of Purchase and Sale to determine which additional closing costs will be incurred.
It is recommended to use a real estate lawyer who has dealt with the same project developer in the past, since they would be able to better anticipate any issues that they have had in the past while closing other client’s deals with that developer.
Condo Reserve Fund
When buying pre-construction, buyers will need to contribute at least two months of condo fees to the condo’s reserve/emergency fund. This is usually levied at the time of closing.
Again, read (or have your lawyer read) the Agreement of Purchase and Sale carefully!
When the condo is built and a buyer’s unit becomes ready to be moved into, there is a period of ‘interim occupancy’, where the Buyer can “take possession” i.e. move into the unit, but not yet own the unit.
This is because titles cannot be transferred until the WHOLE building is complete. Only after completion will the unit ownerships be handed over to buyers. Buyers can start making mortgage payments after that.
During the period of interim occupancy, the Buyer does not yet own the condo; they simply pay the builder an amount roughly equal to what their mortgage payment + condo fees + taxes will equal.
Many buyers choose to take advantage of the occupancy period and move into the units, especially if at the time they are renting a place where the rent is higher than the occupancy fee for their new unit.
However, the drawbacks should be noted: most of the building’s amenities will not be open for use, and there will likely be a lot of noise in and around the building, as the builder finishes other units and general sections of the building.
Buyers can elect to avoid occupancy fees by paying the entire purchase price with cash at the occupancy date. However, these terms must have already been put into the Agreement of Purchase and Sale before the end of the cooling off period.
Unlike resale condos, pre-construction condos are subject to HST, which builders generally factor into the purchase price of the unit and pay on behalf of the buyer.
However, if a buyer will be living in the unit themselves, they will likely qualify for an HST rebate. Note that most builder prices assume this, and so this rebate is often already factored in as well.
For investors, there is also a rebate opportunity, but to be eligible they need to rent the condo out for at least a year, with adequate proof of doing so
It is highly recommended to get professional legal advice about potential HST rebate qualifications beforehand.
The Final Word
With so many fees and closing costs, it is no surprise that many pre-construction condo buyers find themselves facing larger than expected bills around closing time.
However, with due diligence and legal advice, any buyer can confidently navigate these waters and land their brand-new, dream condo home.
If you’re a prospective first-time homebuyer on the fence about making the leap in 2019, consider that mortgage rates are in a great place right now, and that the Canadian government has made it a bit easier to afford a home in 2019.
Contact us if you’re looking for a Pre-construction condo in the GTA.
Budget 2019 : Buying Your First Home in Canada Just Got Easier
Everyone knows that house prices across Canada have been a little crazy in the last few years. With supply tight and ever-increasing demand, prospective buyers are often finding themselves priced out of the market.
This has especially taken its toll on Young Couples, Millennials, and other first-time middle-class buyers. Many of them have opted to continue renting or living with family, instead of fulfilling their dreams of buying their first home.
Well, if you’ve been holding off on your first home too, do we have some great news for you!
In the recently announced Budget 2019, the Canadian government has made provisions for some much-needed relief to first-time home buyers under two programs – the brand new CMHC First-Time Home Buyer Incentive, and the updated Home Buyers Plan.
CMHC First-Time Home Buyer Incentive
Under this program, the Canada Mortgage and Housing Corporation will step in with up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians.
The money will go to first-time home buyers applying for insured mortgages. The government is planning to have the program up and running by September 2019.
Here’s how it’s going to work
- You will have to make a minimum 5% down payment.
- CMHC will step in with an incentive equaling 10% of the house price.
- Since you’d now only have to borrow for 85% of the house price, your monthly mortgage payments will drop substantially – for a $400,000 home, that’s amounts to a monthly saving of over $200!
While this is great news for anybody in the market for their first home, there are some important caveats:
- Not all houses are eligible. The incentive will be 10% for newly built homes, but only 5% for existing homes. While this limits the overall usefulness of the program, it definitely helps anyone looking to buy a brand new unit, such as a pre-construction condo.
- Not everyone can apply. Only households with an annual income under $120,000 would be eligible to participate in the program.
- This isn’t free money. Home owners would eventually have to repay the incentive, possibly at re-sale, though how exactly that would work has not been clarified yet.
- You still have to qualify for a mortgage. Applicants for mortgages will still be assessed under the federal stress test. The test ensures that borrowers will be able to keep up with their debt repayments even at higher interest rates. However, the incentive would make it easier to qualify, since applicants would have to qualify for a lower mortgage than they would have had to without the incentive.
- The house price must be below $500,000. The amount of the insured mortgage plus the CMHC incentive would be capped at four times the home buyers’ annual incomes, or up to $480,000. With the 5% minimum down payment mentioned earlier, that means that houses must be priced below $500,000 to be eligible.
Home Buyer’s Plan (HBP) 2019
Another measure to help first time home-buyers in the new budget is an enhancement to the existing Home Buyer’s Plan.
Right now, first-time buyers are allowed to take up to $25,000 out from their Registered Retirement Savings Plans (RRSP) to finance the purchase of a home, without having to pay tax on the withdrawal.
Budget 2019 is proposing to raise that cap to $35,000. The new limit would apply to HBP withdrawals made after March 19, 2019.
However, home buyers will have to put the money back into their RRSP over a period of 15 years, otherwise HBP withdrawal will be added to their taxable income.
The Final Word
If you were on the fence about becoming a home-owner for the first time, these changes proposed in Budget 2019 are welcome news!
However, with home prices being what they are, you will be hard pressed to find houses under the $500,000 limit in most major cities.
The good news: you can find some great Pre-Construction Condos at that price, right here on our website!
As Condos become more affordable thanks to the Government’s new incentives, expect more competition for the best units. To stay ahead of the curve and land your dream home, join the Condosky Insiders’ Club – you’ll get first access to pricing, floor plans, and VIP incentives!
For any questions, don’t hesitate to contact us.
Condos in Mississauga : 5 Exciting Pre-Construction Projects To Watch
If you’re in the market for a new place to live, chances are you’ve considered Mississauga.
Once a quiet, residential town, Mississauga is rapidly becoming one of the hottest places to move to, thanks to the availability of good jobs, rapidly developing urban amenities, proximity to downtown Toronto, and the presence of relatively affordable housing.
As a result, many newcomers to Canada, young couples, and first time home-buyers are seriously considering Mississauga as a candidate for a new home.
Developers are rushing to capitalize on this demand. Condos, which are generally considered a great option for first-time buyers, are being built at an eye-watering pace across Mississauga.
With so much inventory coming to market soon, and with such strong demand potential, this makes it a great time to buy into a Pre-construction Condo in Mississauga.
Here are some of the most exciting condo projects on the horizon…
Location: 465 Burnhamthorpe Rd W, Mississauga, ON L5B 0E3
Starting From: High $300,000’s
Occupancy: Est. 2021
Types of Units: 1 BR, 2 BR, 3 BR
The newest addition to Parkside Village, Avia Condos by Amacon has a lot going for it. Located in Mississauga City Center, this 45-storey, 568-unit condo is located just minutes away from Square One – Canada’s second largest shopping mall. Boasting 91 walk-score and 83 transit-score, and in close proximity to the Art Gallery of Mississauga, Living Arts Center, and Mississauga’s Celebration Square, AVIA’s lucky residents will be able to enjoy a true downtown lifestyle.
As for the units themselves, we anticipate sizes ranging within 1 – 3 bedrooms + den. Each suite is expected to feature 9’ foot ceilings, floor-to-ceiling windows, open concept designs, and an expansive balcony and/or terrace.
We will be updating more information about Avia Condos at Parkside Village as we get closer to the launch date, so Bookmark our Listing Page and Sign up for our Insider’s Club.
Location: 21 Park St E, Mississauga, ON L5G 1L7, Canada
Starting From: $500,000’s
Occupancy: Est. 2021
Types of Units: 1 – 3 BR + Den Suites, 3 BR + Den Townhomes
Tanu Condos & Towns is a new 15-storey, 204-unit development by Edenshaw, located at Lakeshore and Hurontario, in the up-and-coming Port Credit neighborhood.
The Port Credit Go Station is just a short 4-minute walk away, while major roadways like Highways 401, 27, QEW, Hurontario St. and Lakeshore Rd. are also just minutes away.
Learn more about Tanu Condos & Towns.
Location: 5044 Hurontario Street (at Eglinton)
Starting From: $362,000
Types of Units: 1 – 2 BR + Den Suites
Perla Condos is the third part of the 10 tower Pinnacle Uptown project at the popular Hurontario and Eglinton Intersection. The two new towers will be 15 and 33 storeys, and will be home to 316 suites.
Situated in an up and coming uptown neighborhood, Perla offers residents easy access to restaurants, grocery stores, banks, transit stations & lots more.
Learn More about Perla Condos at Pinnacle Uptown.
Location: 26 Elm Drive West
Starting From: $349,900
Types of Units: 1 – 2 BR + Den Suites
Edge Towers is a three tower, 1200-unit project by Solmar Development in Mississauga City Center. The first phase of this project has now launched, with occupancy expected in 2020.
Residents will be just a few minutes walk from Square One, and will have easy access to two future Hurontario LRT stops. Residents will also be able to enjoy amenities like 24-hour concierge, Gym and Yoga studio, Rooftop terrace with fireplace, Games Room, Movie theater, and more.
Location: Burnhamthorpe Road and Confederation
Starting From: SOLD OUT
Types of Units: 1 – 2 BR + Den Suites
M City Condos is a master planned, $1.5 billion project of over 10 condos by Rogers Real Estate in Mississauga’s City Centre. M City Phase 1 and 2 – which includes a 60-storey tower, the tallest in Mississauga! – have just recently sold out, but registrations for M City phase 3 will be starting soon!
Learn More about M City Condos Phase 1 & 2
The Final word
If you’re in the market for a new condo – to live in or as an investment property – then Mississauga is a great place to look. But be warned, because there is a ton of competition!
To get ahead, Join our Insider’s Club – you’ll get access to floor plans and pricing before anyone else, along with VIP pricing and benefits.
For any questions, feel free to contact us.
Micro-units are coming to Toronto
Sidewalk Labs, a subsidiary of Google’s parent company Alphabet Inc. is looking to transform Toronto’s waterfront into something straight out of a science fiction novel. Micro-units, taxi bots and modular buildings are just some of the innovations coming to Toronto.
After winning a competition organized by Waterfront Toronto, Sidewalk Labs was granted rights to develop Quayside, a 12 acre site in Toronto’s East Bayfront Neighbourhood, with the stated goal of scaling up across Toronto’s Portlands, an 800 acre area.
The first project by Google’s Sidewalk Labs, Sidewalk Toronto is expected to become a testbed for emerging technologies, material and processes. In Today’s post, we will cover three of these proposed innovations and their implications on Toronto’s real-estate scene.
Self-driving taxi bots
When Uber launched in Toronto in 2014 it caused a massive uproar and disruption among Toronto’s taxi drivers, who worked within a government run licensing-monopoly where only a set number of taxi-plates are issued per year. Prices for these government issued plates reached a high of $360,000 in 2012. Since Uber has come along, prices for taxi plates have reached sub $100,000 levels, and today can be found as low as $90,000 on websites such as Craigslist and Kijiji.
And if that major game changer wasn’t enough, Sidewalk Labs is bringing another potentially disruptive idea to Toronto’s waterfront: Self-driving taxi bots. Users can chose to ‘ride alone’ or pick bots with roof-racks for their bikes, among other possibilities. High traffic zones will be served by multi-passenger vehicles called ‘van-bots’ . These innovations are expected to reduce traffic and provide a quicker, more efficient user experience.
They will also reduce the need for parking spots in condos and around the neighborhood, allowing for more purpose built spaces that reflect then needs of the community.
As the cost of living continues to increase in the Greater Toronto Area, an increasing number of first time home buyers are priced out of owning a home. With the rise in rentals, there is a real demand for low cost affordable housing that is easy to scale.
Sidewalk Toronto looks to bring affordable homes built using pre-fabricated parts, made from a base set of modules that can be configured into different unit and building sizes, shapes and colours.
“Sidewalk estimates that modular systems can cut the assembly time in home production to one-third of conventional construction, saving both time and money. In addition to reducing the initial capital costs of construction, operating and renovating expenses will be reduced, as prefabricated units are interchangeable, standardized product components that can be easily replaced or recycled.”
As home prices continue to increase, and mortgages become less accessible, some Torontonians are finding themselves being priced out of even the smallest downtown condos. Sidewalk Labs looks to bring the concept of the micro units – some as small as 162 sq ft – as an aid to Toronto’s increasingly expensive real-estate.
When micro-units were piloted in New York City, over 60,00 applications were field for the affordable units. For the first time, people who could never live in the downtown New York City core, now owned a micro-sized unit right in the heart of downtown Manhattan.
“With similar dynamics at play in downtown Toronto, and a virtual blank canvas with which to work on the Eastern Waterfront, the impact at scale of a micro-unit program could be trans-formative for the local housing market.”
It’s clear Toronto’s waterfront will be changing in ways like never before. Stay up to date on these developments and more by following @Condoskyrealty on Instagram and Facebook
Condo Market Continues Strong Growth into 2017
Condo Prices 2016 Year in Review
2016 brought some of the most dramatic increases in home ownership costs in recent history. The fourth quarter of 2016 in particular saw an increase in condo sales by 22.3% and a decrease in new listings by 13.4% compared to last year.
What this means is that despite the increase in sales over last year, supply remains constrained by the almost 15% reduction in condo listings. Pre-construction developers can barely keep up with the demand as most projects with occupancy dates in 2017 and 2018 are already sold out.
The average condo price in the Toronto region saw a 14.5% increase over last year’s figures. This was also the first year where over-asking sale prices for condos became a thing. The average sale to list price in the Toronto and Mississauga market were at 99% or 100%
Less time on the Market
Condos on average were also spending less time on the market. With same day sales becoming a reality for many home owners. In the fourth quarter of 2015, the average home would spend 33 days on the market before it sold. In 2016 this number has gone down to 23 days on the market.
Condos are the Future
The average detached home in Toronto now sells for about $1.4 Million, a staggering 27% increase over last years figures. The average detached home in Mississauga sells for about $750,000.
All low-rise home segments saw over 100% sale to list price ratio, meaning multiple offers and high competition are the new norm.
With no sign of prices slowing down, condos have become an attractive option for first time home buyers, many of which can no longer afford single family low-rise homes. While detached and semi-detached homes saw the highest price increases, condos saw a more controlled growth at a modest 15%.
Forecasts have marked 2017 as a year of similar growth, with expected condo price increases of 10-12%.
Rentals are the Future of Condo Investment
Competition between renters increase in 2016. The number of condos listed for rent was down almost 15%. Average days on market
The number of condominium apartments listed for rent in the fourth quarter of 2016 was down substantially (-14.2 per cent) compared to Q4 2015. This lack of inventory was at the root of the dip on rental transactions (-5.8 per cent).
The average one-bedroom rent for the TREB market area as a whole was up by 7.4 per cent on a year-over-year basis to $1,776. The average two- bedroom rent was up by 8.0 per cent to $2,415.
Given these trends, many buyers are now purchasing condos with the intent to rent them out as a short term investment, and then sell them down the line in a couple of years.
The bottom Line and forecast for 2017
If you take away anything from this article it should be the following:
- Home and Condo prices across the board have been rising over the past couple of years. Many home buyers who are on the fence or waiting for prices to settle down should be warned, as prices are not going back to 2016 or 2015 levels. At least not anytime soon. All indicators point to a continuing rise in home prices for 2017.
- As more buyers are priced out of detached, semi-detached and town-home houses, many are turning to condos as an affordable alternative. This means that your average condo will have a much wider appeal than a detached home simply due to the fact that more people can afford it. This translates to a wider audience when you list your condo for sale.
- Those same income earners who could afford condos five years ago are now finding themselves renting instead as they are unable to afford the increasing condo prices. What this means for any condo investor is a continuing increase in rental demand, which will continue well into the next couple of years.
We hope you found this assessment both honest and informative. Please be sure to follow us on Facebook and Instagram for up to date Condo information around the GTA.
Condo Shopping in 3 Easy Steps
Search for Condos in 3 Easy Steps
We are excited to announce the launch of our brand new spanking website, designed from the ground up to make the condo shopping experience as smooth and hassle free as possible.
The aim of this post is to orient you to our new website, teach you how to use the powerful search and e-mail tools built-in to the website, and walk you through the process of searching for your dream condo at Condosky.com
Searching for a Condo… First things first
When you first land on our page you will be greeted by our homepage, with its striking blue banner and search bar.
The easiest way to shop would be to type in a search term and see what comes up. Why don’t we try running a search and seeing what comes up?
Since moving to the waterfront, I’ve been really digging the lakefront lifestyle, so I think I will search for something that is on the water. I’ll try typing “waterfront” and see what comes up.
Condo Search Results Page
Success! It seems our search function is working as expected. At this point you can scroll down to get a glimpse of the projects listed.
Condo Project Summary
Each project summary will include:
- the name of the project
- its current construction status (on the top right corner)
- the builder
- Starting price
- and expected occupancy
Clicking on any of these fields (with the exception of price) will show you results matching that field. For instance if I click 2019, I will be presented with a list of condos with an occupancy in 2019. If I click on Toronto, I will see a list of condos in Toronto. Easy as pie, right?
Our simple 3-step-search
If you still need to do more filtering, simply click on the Orange Magnifying Glass and filter using our simple 3 step process:
In this case I am looking for condos in Toronto, that are in pre-construction, with expected occupancy dates of 2018, 2019, and 2020+. You can mix and match any of these options to find what you are looking for.
Now, getting back to the search… If you find yourself too busy to read up on the individual condos, and just want to save this list for later, you can use our handy e-mail feature to e-mail a list of your search results. Once you click submit, we will send you an e-mail with links to each project on your search results page.
It’s all in the details…
Now that you’ve narrowed your search down, you are ready to delve deeper into the mysteries of each condo. Clicking on a project will take you to a more detailed page. Here you will find a summary of the project, renders, details, videos, a list of the condo amenities as well as a google map, complete with walk, transit, or bike score if available.
Viewing the Floor plans
Clicking on the Floor Plans button will grant you access to available plans, sorted by type of unit. You can click view to browse through these floor plans. If you find the floor plans are too small to fully appreciate you can also maximize them.
If you think you’ve learned enough and are ready to take the next step, simply register for more information. Registering will grant you access to important information about the project that is not available on our website.
Narrow down your choices using the Bed Room Types filter. Let us know if you prefer a low, medium, or high unit (or leave it blank if you’re undecided) and select the floor plan(s) that you are most interested in. Once you’re done, you can leave us a note in case you have any questions, or preferences you want to make clear. Hit submit and you’re done.
At this point, one of our friendly and knowledgeable agents will get in touch with you to help you to answer any questions you may have and to help you sort through the finer details.
And that’s it!
Congratulations, you’ve just registered for your first condo on Condosky.com. We hope the experience was as exciting and seamless as we envisioned it. Be sure to keep an eye on this blog for market updates, condo news, investment analysis, DIY home projects, and so much more.
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