While the benefits can be alluring in a tough housing market, don’t let your excitement lead you into a bad decision. Here are some of The pros and cons of pre-construction
” When you purchase a pre-construction home, you make your down payment on a staggered schedule. While your initial payment will generally be less than a traditional down payment, you will usually pay a higher total amount over the course of construction. The fact that your payments are on a schedule, though, means you have a longer period to build the capital you require.”
” Pre-construction homes also let you get into the housing market at today’s prices, and you don’t have to come up with the down payment and mortgage financing until the future. If a property value rises by $100,000 between the time that you make the purchase and its completion, that’s pure profit for you.”
” At the same time, you have to know how much risk you’re willing to take. While property values have traditionally increased over time, there’s the possibility that the market can dip, and you could lose money on your home.”
Know your risk tolerance
” Be aware that the developer could cancel the project, and you could have missed investment opportunities by having your money tied up in the build. Are you able to make an additional deposit if required by the developer? Will you be able to afford an increase in mortgage payments if rates rise?”
Research additional costs
” It is important to research hidden costs you might not have considered, such as the HST costs.”
”The additional costs that you may be faced with are levies, infrastructure development, and other such elements. If you’re purchasing a condo, he also advises accounting for condo fees, and how these may rise by the time construction is completed.”
Find a Realtor
” Having a knowledgeable Realtor work with you when looking for a pre-construction home is critical. Working with someone with knowledge of the area where your home will be, and who has knowledge of the developer, will save you time and headaches in the long run.”
Source: To read the complete article published on the Financial Post website click on the link HERE
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