what to look when you buy your first condo

Buying a condo is much unlike than ownership a townhouse or unmarried family unit firm. There's a few subtleties that you accept to take into account.

The following is a list of easy real estate tips y'all can implement to make the procedure of buying a condo less overwhelming, easier and less costly.

Tip #i: Accumulate More Money Than You Need For a Down Payment

Cipher tin can shoot downward your goalsof buying a condo faster than not having a suitable downwards payment. In Canada, you'll demand the following % of the terminal purchase price:

• 5% for resale condos.  Withal in some specific areas or depending on your credit history, lenders may require more.
• twenty% for pre-structure condos. This depends on the builder and depends how far the structure has progressed.  If there'due south unsold units close to the projection'southward completion date, builders sometimes accept lower downwards payments.

It'southward always better to have more than the minimum % of your ideal purchase cost.

Why?

There's a possibility that you may change your mind on buying a resale or pre-construction condo.  If you're forced to buy pre-structure, you'll need a larger down payment.

Proceed in listen that in recent years, condos have become a popular living pick.  That ways that resale condos aren't always bachelor in the area you want to purchase in.  This may go out you lot with pre-structure as your only choice.

Tip #two: Set Coin Bated for Condo Endmost Costs

There are costs associated to closing a real estate sale. The real estate industry named these "closing costs".

Original right?

In Canada, it's not possible to lump closing costs in your mortgage. That means y'all'll need to pay them in greenbacks.

Hither's a list of possible costs due on the closing a condo :

• Land transfer revenue enhancement (if ownership resale condo).
• Municipal levies.
• Lawyer or notary fees.
• Condo abode inspections.
• Prepaid condo fees to cover residue of starting time month.
• Prepaid municipal tax for menstruation previous owner paid for that y'all're moving into.
• Bank or lender appraisal fee (when buying resale).

The three largest unavoidable closing costs are usually the land transfer tax, legal fees and balance of the municipal tax.These can reach betwixt $5,000 and $10,000 for a $350,000 condo (depending in which market you lot're buying in).

Then there's the post endmost costs :

• Connexion fees for services and utilities (ie hydro, gas, internet, phone).
• Moving expenses.
• Starting time maintenance on heating and cooling systems.

Most of these endmost costs aren't large amounts merely they add together up chop-chop. Make sure that on top of your down payment, you have enough coin prepare aside for closing costs.

Tip #3: Get Your Paperwork Organized

Most lenders will demand to validate your information earlier letting you sign a mortgage.  Yous may even need to show documentation before getting pre-canonical for a mortgage.

Most lenders volition want to see:

• Proof of income:if you're salaried, at to the lowest degree two paychecks.  If you lot're cocky-employed, y'all'll need revenue enhancement returns to prove income.
• Official letter of employment with your title, employment status and gross income.

In some areas, lenders may likewise need you lot to provide:

• Your last ii years' revenue enhancement papers.
• Your terminal two months' bank statements.

These documents are generally easy to go simply take time to assemble.

Tip #4: Subtract Your Debt Load

Debt load is overlooked past showtime-fourth dimension condo buyers.

Merely what is it and why does it matter?

Debt load is the ratio of your full debts to your gross income.Lenders use this ratio as ane of the variables they look at to estimate the level of risk of lending y'all money for a mortgage.The lower the debt load, the better mortgage rates you'll get.

Look at it from the lender's perspective and information technology makes sense.

If yous're ownership an expensive condo and take all sorts of debts, y'all'll be financially spread thin.  Should you lot lose your income, you won't be able to pay the mortgage. To cover this take a chance, the lender will offer a mortgage at a higher rate.

What If I Accept Large Debts?

For those with big student debts or car loans, there'south ii things you can do to mitigate the effect of debt load:

• Pay your bills on time, every month.
• Have (or work towards) long term and established income.

Consult a debt specialist and explicate that you want to buy a condo. You may exist able to consolidate your debts to increase monthly cash flow and pay less involvement.

Tip #5: Bank check and Improve Your Credit Score

Your credit score is like a first impression when interacting with banks and lenders.  Information technology shows lenders how much debt you have and how good y'all are at repaying them.

A low credit score tin can affect your mortgage'southward interest charge per unit when buying a condo.  However, even if you don't have many debts, your score may notwithstanding exist low. At that place'southward many reasons why this can happen:

• Bad credit utilization: if y'all accept pocket-size credit limits but are always getting near that limit, the lenders encounter you lot as constantly "maxing out".  Instead, increase your credit limits (even if you don't utilise it).
• Opening and endmost credit accounts: if y'all constantly open up and shut credit cards, you lot're negatively affecting your credit utilization.  You're also not establishing a long term credit history.
• Debt ratios are unbalanced: lenders like to encounter your income to debt ratio as small as possible.  Because information technology'southward unrealistic for everyone to have 0 debt, lenders like to see 30% as debt to gross income.
• Not making payments on time: every time you miss a payment, that's a ding to your credit score.
• Yous aren't aware of a bad credit mark: sometimes a lender leaves  a negative strike on your account by accident.  Check your credit score and profile.

How to Check Your Credit Score (for complimentary)

In Canada, checking your credit score is free.

You lot tin club a copy of your credit file by mail with the two national credit bureaus: Equifax Canada and TransUnion Canada.  All you accept to do is fill out the personal data questionnaires.

Tip #6: Utilize a Mortgage Broker to Get a Better Charge per unit

The first person to contact when buying a condo, regardless of resale or pre-construction, is a mortgage broker.

Why?

Mortgage brokers are experts at finding the right mortgage for your specific situation.

They also have access to lending companies you have no way of contacting directly.  These companies are specialized in residential mortgages only and don't offer the services of a bank.  They don't interact with the public. Because they have no overhead, their rates are commonly much better than banks.

If you endeavour shopping effectually for mortgages at banks yourself, y'all'll confront 2 challenges:

• You may non find the best rates.
• You'll waste material a lot fourth dimension in appointments or on the telephone.

No Drawbacks to Using Mortgage Brokers

So how much does a mortgage broker cost you in the end?  T heir services are always free. They get a commission bonce the bargain is signed at no extra toll to y'all. Yous're basically hiring professional help for free.

Mortgage brokers also make it easier for you to get pre-approved.  This is an important stride before contacting existent estate agents or shopping for pre-construction condos.

Tip #7: Get Professional Help by Building a Real Manor Team

Don't underestimate the aid of other real manor professionals. A successful condo purchase is the culmination of many moving parts.

Find a Realtor Y'all're Comfortable Working With

After finding a mortgage banker, it's time to contact a existent estate amanuensis. When calling realtors, make sure they're knowledgeable of the condo market in your area.

When buying a resale condo, you won't have to pay the realtor'southward commission. Your realtor gets his or her commission from the selling realtor's commission fee.

What Nearly Buying Pre-Construction Condos?

Near people don't know this, but if you lot're buying a new construction condo, a real estate agent can as well help you. You'll accept to be upward front with your realtor about wanting to buy pre-structure.  Because developers typically don't pay commissions you'll likely accept to pay it.

That actress expense is well worth it though.  Here'southward why:

The realtor can help yous negotiate a ameliorate deal with the builder when ownership a pre-construction condo:

• Reduce the down payment.
• Get ameliorate upgrades for the aforementioned cost.
• Negotiate parking or storage units.
• Review the contract and negotiate improve terms.

In other words, a realtor pays for itself, fifty-fifty when buying new structure condos.  I f you're in a market that offers both resale and pre-construction condos, ask your realtor that the search non just exist limited to resale.

Home Inspectors Are Invaluable

If you're buying a resale condo, you demand to hire a reputable abode inspector. While it'south mutual to become a home inspection for single family house, condos need them too.

When placing an offer on a condo, your real estate agent will include a home inspection clause as part of the condition of the offering.  This lets y'all inspect the property and back out if at that place's any structure problems.

If yous go frontwards with the purchase, knowing the flaws with the construction may save you thousands in unexpected renovations. You lot can also use the findings of a home inspection to ask the seller to drop the price. This can assistance you comprehend the costs of the renovations.

Tip #viii: Don't Buy a Condo Just For the View

Whether it's a resale or pre-construction condo, don't buy solely for the view. At any time, a new edifice can be built that volition block your view.  The exception is if you lot're buying a condo overlooking a protected park, heritage buildings, a body of water or newly congenital buildings.

This tip is important because condo builders charge more the higher the flooring. This affects resale prices since the seller passes this cost onto you.  Do some enquiry on what buildings are around y'all when buying a condo on a high floor.

Bonus Tip: Write a Detailed Budget

Earlier starting the process of buying a condo, write a detailed budget.  This will assist y'all determine the following:

• Can you lot actually beget a condo?
• If you can, how much can you afford?
• Is there a lifestyle compromise (if whatsoever) you should expect?

The #ane mistake first-time condo buyers make when preparing their budget is replacing their "Monthly Rent" line for "Mortgage Payments".

If simply it was that easy.

You come across, when you own a condo, you lot're responsible for much more than just condo mortgage payments.

Instead of bold your monthly rent will be more than or less the same every bit future mortgage payments, consider the following "Basic Condo Expenses":

• Mortgage payments.
• Condo Fees.
• Municipal and School Taxes.

How To Estimate Municipal and Schoolhouse Taxes

There's a few ways you lot can get a general idea of how much your basic dwelling house expenses will be.

For the municipal and school taxes, each city has a different taxation charge per unit.  You tin can find this information on the municipalities' websites. Hither are quick links for the major condo markets:

Vancouver – Toronto – Montreal

Ottawa – Calgary – Edmonton – Halifax

Just multiply the charge per unit you lot discover on those pages with the holding value of the condo you program to buy.  Separate past 12 to find out how much it'll be per calendar month.

Don't forget two things when estimating municipal taxes:

• They're based on how much the municipality estimates your holding at: Adept news though, the municipality is e'er backside market prices.
• They increase year over year: While it's never huge increases, information technology's best not to program a tight budget.

How to Estimate Condo Fees

This can become a chip catchy since condo fee rates vary by:

• The condo development: more amenities means higher condo fees.
• The age of the building: the older the architect, the higher the condo fees.
• The square footage of the condo: the more foursquare feet, the higher the condo fees.

Here'due south the skillful news:

There'south means you can guess them accurately for at least 5-10 years.  You lot simply need to know if you're buying pre-structure or resale:

Estimating Pre-Construction Condo Fees

If you're planning on buying a pre-structure condo , ask the developer how much they plan on charging.  It'southward a prophylactic move to have that number and increase it by 15-20%.

Why?

Because one time the developer hands over the holding to the owners, condo fees usually go up.  That's to build upward the reserve fund and make modifications.

Estimating Resale Condo Fees

For those thinking of buying a resale condo, you lot can look at the listings on Realtor.ca .  Each list shows how much the condo fees are.

This is what you're looking for (near the bottom of the listing):

So look at a few backdrop in developments that entreatment to y'all and for condo sizes you're comfortable with.  That'll give you and idea of how much you lot'll exist paying in condo fees.

General Rules For Estimating Condo Fees

If you're looking for more square footage, in general, maintenance fees in condo townhouses tend to be lower than typical condos.

To requite yourself more financial elbowroom, expect the following when you budget for condo fees:

• Condo fees increment every yr.
• The older the building (15+ years), the more likely condo fees volition fasten.

Other Upkeep Considerations

Then there's expenses that vary by area.  Here are some examples of extra expenses condo owners may have that renters don't:

• Heating and/or cooling;
• Electricity;
• Hot water tank rental;
• Furnace and/or air conditioner maintenance;

Wrapping This Up

Buying a condo involves many moving parts and processes.  Nonetheless, there's a lot you lot tin can do to brand it easier for yourself.  Feel free to contact us if you need more than condo advice!

sledgefarome1990.blogspot.com

Source: https://simplecondoadvice.com/tips-for-buying-first-condo/