Pros and Cons of Buying a New Vs. Resale Condo in Toronto

Pros and Cons of Buying a New Vs. Resale Condo in Toronto

 If you're thinking of buying a condo in Toronto, there are so many variables to consider. One factor to consider is whether or not to buy a resale condo, or buy something brand new from a developer.

There are perks and drawbacks to each. It's important to weigh them all before you make the big decision. Let's go over some of the pros and cons to help you make the right choice for you.

Buying Resale

Pros:

See what you're buying. It may sound obvious, but buying a resale condo allows you to physically see the property before you buy it. With a new condo development, you're only looking at plans and artist drawings. Not only can you view a resale condo in person, but you can also walk through the place and get a true sense of the space to see if it fits your needs and lifestyle.

Move in sooner. Buying a new condo usually means you have to wait months or even years before the building is constructed. and in many cases, the occupancy date can get pushed out more than once. Instead, a resale lets you negotiate an exact date with the seller, which can help you organize your move-in date more easily. Then, you can get started with your new life in your new home.

More streamlined mortgage process. The home loan process with a resale condo is usually easier. That's because you know what today's interest rates are, what your current income is, and what your mortgage payments will be. Plus, you won't have to concern yourself with any potential shifts in the real estate market by the time a new condo build is ready to close.

Smaller deposit. The deposit on a resale property is usually around 5% of the purchase price. Pre-sale condo deposit structures are usually a lot more expensive. A typical deposit for a pre-construction condo is 20% of the purchase price.

No GST is required. In Ontario, the sale of new construction condos requires GST/HST to be paid. You don't have to worry about this extra payment when you buy a resale.

Cons:

No customization option. Buying a new build gives you the chance to have some input into its design, layout, and finishes. By the time you move in, there's no need to do anything to fix it to your liking, But you won't get this perk when you buy resale.

Not new. It's nice to be able to move into a property that has never been lived in. When you buy a resale, there's a chance that it may be a bit worn or require some updates.

Bidding war is possible. Since the price on a resale condo is not necessarily fixed, there's a chance that you could be stuck in a bidding war if other buyers are interested.

Buying New

Pros:

Customize to your liking. As a new condo buyer, you have input in how the condo will eventually look when it's built. If possible, you may also be able to change up the layout, which means no renovations will be needed when you move in. Plus, you can customize all the finishes as you please, leaving you with a move-in-ready home.

Never lived in. If you love the idea of being the first and only owner and resident of your home, then buying pre-sale may be worth considering.

Deposit spread out over time. Although you'll have to put up a much bigger deposit on a pre-sale condo compared to what a resale transaction requires, the deposit structure is usually set up in such a way that the deposit is spread out over a long period of time. For example, the first deposit may be due within days of signing the contract, while the subsequent deposits may be required in 60 days, then 120 days, and so on.

Time to save for a down payment. In addition to the deposit, you'll also need a down payment, which is required for your mortgage. You'll have plenty of time to save up this large amount since new builds are usually not ready for occupancy for months or even years.

Cons:

Can't see it in person. Considering how much you're spending on your condo, it would be nice to be able to see it in person before signing the purchase contract. But you won't get this privilege when you buy brand new.

Mortgage rates may change. By the time the condo is ready, the interest rates for mortgages may be much higher than what they are today. This will make your mortgage a lot more expensive. That said, the opposite could also happen, so it's a gamble either way.

GST/HST payable. As mentioned, newly constructed homes are subject to GST/HST, which just adds a few extra thousand dollars to the total purchase price of your condo. However, you may qualify for a tax rebate.

Delays possible. The builder may quote you an estimated construction completion date, but anything can happen that can cause delays. And in many cases, occupancy dates get pushed out multiple times, and in rare cases, the development doesn't go through at all. This can be very frustrating, especially since you've got a lot of money tied up in deposits.