Pre-construction condos are becoming popular for those who want to buy new ones. They can be expensive to purchase in prime areas, so that a pre-construction condo can provide a good deal of value. There are several phases involved in buying pre construction condos in downtown Toronto. These include a down payment, deposit, and Interim occupancy. Ask your realtor about current market values for pre-construction condos for more information.
Down payment:
Pre-construction condos generally require a 20% down payment. This is considerably higher than the minimum deposit on a ‘used’ or ‘resale’ home. The deposit is often paid in installments over a year. This payment structure is known as the ‘deposit structure.’ Developers often relax this deposit structure once the units have been sold. Usually, a buyer can expect to pay a portion of the deposit at the time of signing, the next installment within 120/240/365 days, and the remaining amount upon occupancy. However, some developers may allow buyers to pay a small amount of the deposit each year.
Deposit:
To buy a pre-construction condo, you will typically be required to deposit around twenty percent. This amount is much higher than the deposit that you would make on a ‘used’ or ‘resale’ property, but you can spread the payment out over several months. The deposit structure will differ depending on the builder but is usually tied to various phases and timed intervals.
Interim occupancy:
The unit is still under construction in the pre-construction phase and needs to belong to the buyer. During this time, the owner cannot move in, rent out or do renovations. Therefore, getting written permission from the builder before leasing or selling the unit is important.
In pre-construction condos, there are two different closing dates. The interim occupancy period starts once the developer transfers the title to the buyer. The money used to pay for the interim period covers maintaining and running the unit. The interim occupancy phase can range from several months to several years.
Square footage:
As home prices continue to rise in many areas, there is a growing demand for condominiums. Many people attribute this trend to foreign investors pushing the price per square foot. However, it is important to remember that the developer sets a significant portion of the price. Developers must consider hard and soft costs to determine their final price per square foot.