Pre-Construction in Ontario

Demand for housing has been increasing in Canada in past years. More people are now looking to buy their own homes rather than staying on rent and paying someone's mortgage. This demand usually gets addressed by either Resale Homes or Pre-Construction homes. As Pre-Construction provides flexibility to the buyer to choose the interior and exterior of the home, more time to gather funds, etc., more people are now leaning towards it. Like any other kind of investment, pre-construction also has its negative effects like possible delays, hidden fees, etc. The following comparison for both advantages and disadvantages can help you to make an informed decision for your purchase.

Advantages of buying Pre-Construction :

Choice of Layout/Colours

Pre-construction lets you choose the layout as you get to see multiple floor plans for your dream home. You also get the chance to choose elevation of the home, color for bricks for a home, or color of walls in case of condo or house, etc.

Customized interiors

You get a chance to choose your favorite floors, tiles,  kitchen cabinets, countertops. You also have the option to customize your washroom, to pick loved staircase, taps, switches, door handles, lights, etc.  

Higher Returns

The value of your home starts increasing from day one. The beauty is you just provide a deposit of around 10% to 20% and the value rises for the whole value of the home. You can relate it as you book your home at the current market price and by the time you buy it, the value of the home has already been appreciated.

Increased equity

Many existing homeowners book their pre-construction home, which benefits them from two sides as the value of the home they reside in and have booked goes up with time, which provides them more equity in their existing home.

Flexible Deposit Structure

In Pre Construction, Builder wants you to pay around 10 to 20 % of the whole amount. At the time of booking your new home, you pay the initial amount, then you get a chance to pay the deposit in installments. Sometimes, as low as 5000 monthly. These dates and amounts get written in your Agreement of Purchase and Sale(APS).

Cooling off period

Condo builders and most home builders in Ontario, provide their buyers a 10-day cooling-off period, It means, if the buyer changes their mind due to any reason, they can get their whole deposit back.

Incentives from the builder

Most of the time, builders give you Appliances and/or Air Conditioner and/or decor dollars, which can be used towards upgrades for your home.

Disadvantages of buying Pre-Construction :

Purchase based on Illustration

You do not get a chance to see your future home physically, you only rely on conceptual images or illustrations from artist concepts. Your builder can also change these dimensions or mirror the whole floorplan if needed.

Possible Delays

Pre-construction is usually known for delayed delivery, which means, it may affect your plans to move into your new home. Sometimes, closing for your home can even be delayed for a year(s) and we cannot do anything as builders have already got our permission to delay in APS.

Higher Closing cost

You need to be prepared for the closing costs which include your land transfer fees, other taxes, and duties levied by the government, lawyer fees, etc. These are usually 2% of your purchase but may vary depending on the situation.

Hidden fees

There are many hidden fees associated with the purchase of your new home like the cost of planting a tree outside your home, the cost to pave the driveway, etc. Make sure you read your agreement of purchase and understand the costs involved.

Conclusively 

It is really important to consider both advantages and disadvantages of pre-construction before signing an agreement of purchase and sale. You need to evaluate both sides of the coin carefully. If an expert’s suggestion is needed, you can arrange a no-obligation, free meeting with us and we can help you to make your decision.