By Amanda Hayashi
Have you ever heard of “pre-buying your home?” The term pre-buying (also referred to as buying in the pre-construction stage) refers to buying a home before its construction begins. Pre-buying a home has its own advantages and disadvantages, the knowledge of which will empower you to make the right decision.
The advantages are easy to spot:
In a market like Toronto where the prices are rising steadily, pre-buying allows you to pay the price of today for the house of tomorrow, which translates into a great discount.
A new home is new! It is like getting a brand new car; the smell is different! If you buy from a reputable builder, a new home potentially means you have less repairs needed and consequently less ongoing expenses. A new home can be customized to your taste! You choose the finishing in the same way you decorate your home. From the colours of the tiles, to carpet, cabinets, countertops, appliances, and much more. Unlike a re-sale home you don’t have to put up with someone else’s preferences.
You can get a warranty on a pre-construction home. Most of the newly constructed homes in Ontario are protected by the TARION Warranty Corporation. TARION is a government organization, which regulates the builders and vendors of new homes in Ontario. It offers protection against some defects such as major structural defects.
The down payment is paid gradually. A set amount is paid upon signing the contract, and the remaining balance is divided over time until the completion of the construction – for example, an additional 5% at 30 days, 5% at 90 days, 5% 180 days, etc.
But be careful! It is important to review the following points before closing your purchase:
– The reputation of the builder/developer is extremely important. Ask your real estate agent about the sources of such information and seek feedback from other buyers.
– Make sure your financial situation will be appropriate when the completion dates approaches. You will need to qualify for a mortgage before closing. A part of the down payment is paid before you take over the new home. Make sure you are not dependent on this money for day to day life.
– And finally, research the location and neighbourhood that surrounds your investment. The future price of your home is directly related to the quality of the neighborhood.
Rules and regulations are constantly changing. Consulting an up-to-date professional can make a huge difference.
[dropshadowbox align=”none” effect=”lifted-both” width=”auto” height=”” background_color=”#bbe38e” border_width=”1″ border_color=”#922336″ ]*Amanda Hayashi (PhD) is a real estate representative at Sutton Group Old Mill Realty Inc. Brokerage, independently owned and operated. Find her at amandahayashi.com or email: [email protected][/dropshadowbox]
Disclaimer: This article is for information purposes only. Every home buying process is different. This information is not meant to replace expert consultation. Please do use expert advice.