We all have suffered a lot during and post-pandemic. We have suffered physical or financial or both losses because of pandemics. One of the sectors that have seen growth during the COVID-19 time is real estate. The real estate industry has boomed in the last two years and is still showing a growing trend. If you are looking for buying a home and are still confused to buy a completed or pre-construction home, keep reading. The blog discusses in detail the pros and cons of purchasing pre-construction homes in Canada.
Concept of Pre Construction Homes in Canada?
Pre-Construction homes are houses that you can purchase even before construction has started. The builder sells most of the units before starting construction in order to build finance for construction. All types of homes are available be it High-rise or Low-rise. The cost of these types of houses is less as compared to finished properties. You start paying the builder down-payment before construction has started and once the property is complete you will get possession. Although completing and delivering the same will take a few years as agreed in the agreement. Mostly the builder starts selling units approximately 4 years prior to the completion of the units. The trend shows that the interest of people is increasing in pre-construction homes in Canada. Still one must understand the benefits and risks involved with pre-construction homes in Canada before investing.
Pros of Pre-Construction Homes in Canada:
- Cheaper than completed houses.
- Value after completion will be increased.
- The deposit structure in pre-construction homes is pre-longed. The down-payment you have to give is divided into 0 installments that you have to pay in a few years. You don’t have to pay the whole amount in one go.
- It gives you an opportunity to save more money till the time you need to pay your installments.
- Better management of finances as you know the time and amount of installment you need to pay.
- Pre-construction homes give you the opportunity to invest your funds and earn on the same.
- The property rate will hike every year. However, you buy property at the current rate and will be fixed for you. If we go by the trend, In Canada rate of property increases by 5% every year. As it will take 3 to 5 years approximately till you get finished home, the rate of property would have increased significantly.
- Construction, maintenance, and managing the property till possession is not your headache.
- You can bargain and get pre-construction homes at the best rates as competition is high
- You can get high rates if you want to resell or rent an unused new home.
- You can avail of some tax benefits on the purchase of pre-construction homes in Canada
- It is not required to show the purchase of pre-construction property in your credit report
- You don’t have to pay the mortgage till the builder handover your finished property.
- There is no need of taking a mortgage loan or insurance till you get the property.
- In case the builder fails to complete the project and fails to deliver, He will be obliged to give back all the amount you have paid under Condominium Act.
If you are purchasing a pre-construction home for the first time, it is important that you have a clear understanding of the concept and what precautions you need to take. There are numerous real estate agents in your area who can help and guide you through the entire process. They will also help you if you want to resell or rent out the finished property. There are a few risks involved that you must consider while purchasing pre-construction homes and they are:
- You are taking risks by purchasing the house on the basis of drawings and sketches not by physically seeing the finished property.
- Once the property is finished, you have to pay maintenance charges and share utility bills with other owners apart from purchasing costs.
- It is important that you buy pre-construction homes from a trustworthy and experienced builder, otherwise there is a possibility that you do not get what you are promised for and within the agreed time period.
- There is a possibility of delay in handing over the finished unit because of some unavoidable circumstance related to labor scarcity or natural calamities etc.
- There are some additional expenses that need to be considered like taxes for land transfer, legal costs, and other closing costs.
Tips to Avoid Pre-Construction Home Mistakes:
- Select a trusted and renowned builder
- Visit sales centers and explore as much as you can about the project
- Ask as many questions about the project and clear all your doubts.
- All pre-construction homes are not the same. Before making an investment, it is important that you have clarity about the neighborhood, possible property rates in nearby areas, and what you will be getting once the property is ready for possession.
- Give extra attention to infrastructure details like ventilation, flooring, furnishing, amenities, etc.
- Visit other buildings or houses built by the selected builder and see if they match your requirements and meet your expectations or not.
- As per Canadian law, you have 10 days cooling-off period that allows you to cancel the agreement if you change your purchasing decision.
There are a lot of things to consider and analyze before deciding you want to buy a pre-construction home or not. One of the renowned and trusted realtor firms is Team Ash Tewary. Our team first evaluates your financial health along with financial goals and then suggests you best real estate option for you. Our expertise is not limited to only finding suitable properties, we help you with negotiations for getting the best rates and also help you in crossing hurdles throughout the process till you get possession of a pre-construction home in Canada.