Pre Construction Versus Resale Condo
Friday Jul 07th, 2023
Pre Construction Versus Resale Condo
Why buy a resale condo when you can buy a brand new pre-construction condo? I’m Meegan Dennie, a real estate agent in Toronto Ontario Canada and in this video I’m going to cover the differences between new vs not so new condo’s in the GTA.
Let’s start with Pre-Construction Condo’s. The pro’s and "risk’s", let’s call them.
Pre-constructions means that you are buying something that is not tangible yet. You can see what a floor plan will look like and all the decor materials that you get to choose from like kitchen counters, backsplash, cupboards, flooring, bathroom tiles, etc. Being that it will be a new building, you will also have the benefit of low maintenance fee’s and usually really great amenities. All with only 5% down right? Well, that’s where it gets a bit tricky.
Usually you start with a 5% deposit but end up paying approx 20% within the first year in structured payments. That can be a big plus for someone that needs a bit of time before they have the whole 20% deposit. There are no mortgage requirements to purchase a pre construction condo, this is also something that can be tricky later down the line…
You get to pick your own design! But like a new car, the prices start with the very basic model and basic materials/decor. The prices go up based on your taste. So that 700 sqf condo for $770,000 or let’s say $1100 per square foot, may be an extra $50,000 to $100,000 to get the flooring and that backsplash and countertop that you love.
They also usually don’t include parking or a locker and you will need to add another $25,000 to $50,000+ if you will require a parking space. And the higher the floor level you go in the building, you will have to pay a premium for that too…
There are also some risks with the builder not being able to sell all the units required for the project or the builder can run out of financing before the building is built and this can cause years of delays.
Let’s talk about the financing part, aka the mortgage. Remember I said, no mortgage is required? Well, once the building is registered, usually 2 to 4 years after you’ve given your 20% down payment, you will have to qualify for a mortgage. Let’s hope no government financing qualifications have changed that are not in your favour, or interest rates…, or your finances, or your credit score, or that your family has not grown, or that your income has not been negatively impacted, etc, etc, etc and Every day/week that you do not have the financing to close can cost you thousands of dollars.
And PS. your floor plan may have changed a bit.
Ok so that's the pre-constuction side of things, now lets talk resale condo…
A resale condo is tangible. You get to walk in and see the decor and the layout. The view, etc. You know the dollar per square foot right now and you can track what’s been happening in the building in terms of sales and management and maintenance fee’s an even the future plans and what is in the condominiums reserve fund by viewing the status certificate. What you see is what you get and there isn’t any hidden costs or premiums for this that and the other. You know right now what you can afford and what is going on from a financial perspective so a mortgage isn’t going to be a surprise to you. The best one of all, you set the time that you get to move in!! That can happen within 30-90 days and not years down the line.
So, there you have it my friends! Pre-construction and resale in all it’s glory.
I’m Meegan Dennie, Don’t hesitate to call me for anything real estate related In Toronto or the GTA.