5 Things to Consider when Purchasing a Condominum
With many of our clients in the GTA looking a condominiums and especially pre-build condominiums there are some things that you should know about these specialized types of properties.
Size of Unit - Anything under 500 sq feet is an exception for lenders. If it's downtown we can get the floor plan and sometimes get an exception but typically even that would be for 450 at the smallest & it would be a special request Status Certificate - Mortgages for condo units are based on the specific condo building and unit. If you find a resale unit that you like we can have our lawyers review the status certificate to ensure the building is desirable to lenders. This is an evaluation of the financial status of a unit and of the condo corporation. Its main focus is to inform a prospective owner of the fees, of any large increase that is going to come into effect, of any special assessment that is being contemplated by the board, and any arrears or lien that a particular suite might have. In addition, it contains the condo declaration, bylaws, budget, reserve fund, insurance, management contract, rules, minutes of the last annual general meeting, and mention of any lawsuit involving the corporation. Pre-Build Timelines If you purchase prebuild your mortgage will be put in place upon closing. The ideal time to lock in a rate and mortgage product is 120 days prior to closing so we would work on finalizing your application shortly before that. Please keep us updated on the closing date and if the builder makes any changes so that we can set reminders to check in with you. Remember that you may be granted occupancy and move in before you own the unit. In this case you will pay “rent” to the builder for this time period until closing occurs. The "rent" is made up of three parts: interest on the unpaid balance of the purchase price of your condo, an estimate on the municipal taxes for your unit, and a projected common expense contribution to keep the building running. The fee is usually charged monthly and requested in the form of post dated cheques made out to the developer or vendor. When the title is changed from the builder to yourself this is when the closing costs will be due and your mortgage will be put in place Pre-Approval - A mortgage preapproval does not guarantee you funding, your employment, credit profile and finances will be evaluated at the time of closing, not at the time of purchase. This is especially true in cases of prebuild purchases as a lot can change in the time it takes to build your home. At that time you will be subject to the current government regulations, interest rates and qualification guidelines. Capital Gains Tax - If you are purchasing the property as an investment it is best to speak to an Accountant to discover if you would be subject to capital gains tax. We are happy to refer you to an incredible Accountant should you have some questions.
If you are looking at a condomimum building unit it is best to keep your Mortgage Agent in the loop, should you have questions please let us know, we would be happy to help!