Embarking on the journey to homeownership, especially with a pre-construction property, requires careful consideration of various factors. While the allure of a brand-new home is exciting, it’s crucial to navigate the complexities associated with pre-construction purchases in Ontario. In this guide, we’ll explore key considerations to ensure a smooth and informed decision-making process.
Financing & Deposits:
One of the foundational aspects of any real estate transaction is financing. Before diving into the world of pre-construction homes, consult with your mortgage advisor to ensure you have the financial capacity to see the deal through. Unlike traditional resale properties, pre-construction purchases involve a unique financial structure with multiple deposits leading up to the completion date. Understanding this structure is vital to avoid surprises and to help you search for properties within your budget.
Costs Beyond the Purchase Price:
While the purchase price is a significant factor, it’s not the only expense you’ll encounter. Hidden fees such as Development Charges, Park Fees, Levies, and Education Fees can add up substantially on the closing date. Having a seasoned lawyer review the Agreement can unveil these costs and allow you to assess your financial readiness for the transaction. Adjustment Fees, in particular, can catch buyers off guard, emphasizing the importance of a thorough review.
Intent When Purchasing:
Your intent behind purchasing a pre-construction property is a pivotal factor, especially concerning the HST New Housing Rebate. If your intention is to lease the property, you might not qualify for the rebate, potentially resulting in additional HST payments of $24,000.00 on the final closing. Understanding this nuance can help you explore rebate alternatives, such as the Ontario New Residential Rental Property Rebate (NRRPR), which can be claimed directly from the Canada Revenue Agency after closing.
Construction Timeline:
Prospective buyers must grasp the construction timeline and warranty coverage associated with pre-construction properties. The Tarion documents provided by the builder outline critical dates, including tentative closing and occupancy dates. However, it’s essential to acknowledge the possibility of “Unavoidable Delays” such as those caused by unexpected circumstances (e.g., a pandemic). Being comfortable with the timeline and prepared for potential delays is crucial when considering a pre-construction home purchase.
Buying a pre-construction home in Ontario is an exciting venture, but it demands meticulous attention to detail. From understanding the unique financial structure to unraveling hidden fees and grasping the intricacies of the construction timeline, informed decision-making is key. Consulting with professionals, including mortgage advisors and lawyers, will empower you to navigate the path to your dream home with confidence. Remember, a well-informed buyer is a poised homeowner.
Please Note: The information provided here is for informational purposes only and should not be construed as legal advice. If you require legal guidance regarding a real estate law matter, we encourage you to contact Provident Law LLP directly for assistance.
