How it Works: Buying a Pre-Construction Condo

How it Works: Buying a Pre-Construction Condo

Many people jump at the chance to buy a pre-construction condo because it gives them the option to customize their new digs to their heart’s desire. While getting your foot in the door on a new development before the builders have even broken ground is exciting, there are some things that you should know before going through with the purchase. 

You’ll Need to Put 15% – 20% Down 

This is one of the key differences between buying a resale condo and buying a brand new development. While you can put as little as 5% down on a resale property, buying a pre-construction development often demands more from your wallet. Builders will typically request 5% down as a deposit, and then additional 5% installments as you approach the closing date. 

You’ll Have Some Time to Change Your Mind

When you purchase a pre-construction condo in Ontario, you have what is referred to as a “cooling off period”, which is a 10-day window during which you can pull out of the deal with no consequences. We suggest that you take this time to have your agreement reviewed by a real estate lawyer and ensure that all of your financing is taken care of. 

Your Deposit Is Protected Under Warranty 

On the off chance that the new condo development that you’ve put a deposit on folds, the province of Ontario has your back. The Ontario government has regulated the Tarion Warranty Corporation to protect new condo buyers. Deposit protection for up to $20,000 is automatically included in your purchase fees so that you are safe in the off-chance that the condo development goes bankrupt. 

You’ll Need to Pay Attention to Your Closing Date

When buying a brand new condo, it’s common to get occupancy in your unit anywhere from 3 to 6 months before your closing date. This is called “interim occupancy,  and it means that if you decide to move in before you close, you’ll need to pay an occupancy fee to the builder until you do. Note that this fee is known as “phantom rent” and does not count toward your mortgage. 
Do you still have questions about buying a pre-construction condo? Are you interested in buying a pre-construction condo in Ottawa? Click here to contact us so that we can answer your questions or help you find the perfect condo! 

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