New condo development projects in Toronto and the GTA continue to pop up consistently. Many of these projects present ample opportunity for new homebuyers looking to become homeowners or even for investors. But like anything in life, before you take the plunge, there are several things you’ll want to know about new condo development projects in order to protect yourself from unforeseen complications due to a lack of experience.
In this article, we are going to look at several of the most important things to consider when looking at preconstruction condos in Toronto and the GTA.
1. The Deposit Process
Like anything in real estate, you will need to come up with a deposit. Most projects require more than a 5% deposit. In some cases, condo development companies will want between 15 and 20% in order to fund construction.
The process typically requires a deposit of around 5% when the agreement is signed, with the additional 10 to 15% coming at set periods leading up to initial construction and occupancy. The terms of your down payment will have to be negotiated and it is highly recommend you have a lawyer help you structure them in a favorable way.
2. The New Condo Development Projects Cooling Off Period
Investing in new condo development projects in Toronto and the GTA are a big decision. Luckily, current Ontario laws provide you with a 10-day cooling off period that provide you with an opportunity to walk away from a deal should you have second thoughts. You won’t lose your deposit either.
3. You Have to Pay HST
No one likes paying HST. When it comes to new condo development projects (like new homes), you have to pay HST. If you plan to live in the home yourself and are a first-time homebuyer, you’ll be able to benefit from an HST rebate. However, those looking to use their condo as a rental will have to pay the HST on their unit. On a large purchase, this can quickly balloon into tens of thousands of dollars.
4. Pay into the Condo Reserve Fund
Most preconstruction condo projects require buyers to pay two months of condo fees in advance to the condo reserve fund. This is a perfectly normal practice and shouldn’t be alarming to you. The fund is used for emergencies should any devastating events occur.
5. Don’t Be Fooled by Low Condo Fees
One of the ways that most developers lure people into buying condos is by setting the condo fees extremely low at the beginning.
As a general rule, condo fees only go up over time. When companies look to develop a property, make major changes like windows or balconies, or change ownership, these fees almost always go up.
Don’t be fooled into buying a specific unit because the condo fees are low. They will go up over time, you can count on that.
6. Delays are Guaranteed
New condo development projects in Toronto and the GTA rarely finish on time. Changes will be made, delays will happen, and you will likely become frustrated.
Never get too attached to any dates that you are provided early on in the process. A period of bad weather, material shortages, and other similar events can and will delay construction. Your condo will eventually be completed, but you should plan for delays and have a place to stay should they occur.
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