Purchasing preconstruction townhouses in Toronto gives you the opportunity to be part of the designing and building of your new home, right from the beginning.
You're able to customize the townhouse to your preferences and take advantage of special preconstruction pricing. There are multiple advantages you can experience as a homeowner when purchasing a townhouse during the beginning phases.
As with any home purchase, it's important to take the time to research and consider all your options before signing a contract. You need to weigh the pros and cons to determine if it's the right choice for you.
In this guide, we'll go over all the details about buying a preconstruction townhouse in Toronto and the questions you should keep in mind while going through the process.
Preconstruction Townhouses in Toronto - Everything You Need to Know
Preconstruction is the phase of the building process where designs and plans are created. This is the part of the project where everything is planned out, from budget to design features. Buying preconstruction can be cheaper than buying a townhouse later on in the project.
Townhouses are sold in different pricing stages. Purchasing a preconstruction unit in the first phase can save you 5-10% off the final purchase price. Keep in mind that the best townhouses are usually sold in the final phase because the prices are higher then.
Preconstruction townhouses are on the rise in the Toronto area. There are currently 640 new home developments in the city, with 74 of those developments being townhomes.
Like with any new home purchase, there are some pros and cons to keep in mind. Some advantages of purchasing a preconstruction townhouse are:
- Potentially put down a small down payment as your home's value appreciates over time
- If you purchase a townhouse during the preconstruction phase, you'll have time to improve your finances before you apply for a mortgage
- Avoid high costs of pre-built homes in pricy urban areas
- Customize your home to your specifications
- Experience the latest at-home technology
- Less maintenance than with an older home
Think about these disadvantages when considering a preconstruction townhouse:
- The total purchase price of a preconstruction home is significantly higher than an existing home
- Cost of amenities and upgrades add up quickly
- Features can be marked up substantially so the builder makes a profit
- New construction developments may be farther away from schools, shopping centers, and other important places
- You could be living in a construction zone for a period of time
- Newer townhouses oftentimes lack charm and the architectural details that older homes have
Considering the Purchase of a Preconstruction Townhouse?
When buying a preconstruction townhouse, you'll only need to provide a deposit upfront. The remaining balance is due once the townhouse is complete.
Typically the deposit, or down payment, is around 20% of the final price of the home. You can put down 5% to start and make payments over time.
The entire process can seem intimidating, but it can be broken down into a handful of straightforward steps:
- Review your finances: Look at your current debts and how much you have saved to see if this is the right financial decision for you
- Visit the townhouse sales center: Explore the available floor plans and make sure you secure phase one pricing
- Pay your deposit and sign the contract: Once you've picked out your townhouse, supply your deposit and sign the contract to lock in pricing
- Construction: You'll be updated every step of the way on the townhouse's construction progress, making any decisions as needed
- Inspection: Walk through your townhouse to ensure everything is to your specifications
- Closing: Finalize your home loan
- Moving In: Move into your brand-new condo
Purchasing a preconstruction townhouse is a great way for you to get a new build property at a lower price, as long as you ensure you're getting phase one pricing. You're able to select multiple customization options at a lower price, making your investment worth it.
Find a Broker or Sales Representative
When you visit the model townhouse or sales building, you'll likely run into a sales agent. You can work with them to finalize your contract, but you want someone that is on your side, ensuring you get the best deal possible. The sales agent is likely getting paid by the builder and will receive a commission after every contract they lock in.
Do your research and select a real estate agent in your area. They'll review the contract with you to ensure you're getting a good deal.
Decide on Your Desired Area
When looking for townhouses for sale in the Toronto area, you'll need to make a list of what's important to you. Townhouses are typically built in more urban areas, so keep that in mind if you need to be close to schools, shopping centers, or major highways.
Proximity to Schools
If you currently have kids or will in the future, think about how close you are to schools in the neighbourhood. You'll also want to look at the quality of the schools and how they rank nationally.
Proximity to Work
Your work may be located in an urban area as well, which is great if your townhouse is in the same neighbourhood. You may be able to walk or bike to work. But if your work is farther away, think about your commute time and if you want to sit for hours in traffic each day.
Proximity to Major Highways
Spending 20-30 minutes just to get from your home to a major highway can be frustrating. If you need easy access to highways, keep that in mind when selecting the area you buy in.
Research the Builder
Now that you've selected the neighborhood in Toronto you want to move to, you need to find a reputable builder. Research builders on the web and evaluate their internet presence. If they don't have a high-quality website, you'll want to look elsewhere.
On their website, they should have customer testimonials and reviews. This is a great place to check to see how a previous buyer's experience went with the builder. If they had a bad experience, that's a red flag.
On their website, they should also include floor plans and pictures of available townhouses. You'll be able to check before you make an appointment for a tour if they have a layout that'll work for you and your family.
Make an Appointment to Visit the Model Home
Once you've narrowed down your list of builders, make an appointment to visit one of their model homes. You'll be able to look at the model homes without your realtor present but if you're interested in moving forward, you'll want to involve them before reviewing the paperwork.
Additionally, you should avoid negotiating directly with the builder. It may seem like they're offering you a good deal but it's always a good idea to bring in a third party (your realtor) so they can review the contract. Real estate agents are familiar with preconstruction contracts and they'll know if you're getting the best price possible.
Consider this checklist when visiting the model homes:
- Know what features come standard in the townhouse and what's an upgrade
- Finalize your budget before you go and stick to it
- Know your timeline
- Know what you can compromise on and what can be upgraded later
- Figure out your colour scheme
Ask the Right Questions
There are a few areas you should ensure you ask questions when visiting a model home. Get all the information you can before you sign a contract to avoid any unexpected surprises later.
Many townhome communities have a Home Owners Association (HOA) for additional fees. They cover other amenities, like pool usage, security, etc. Ask if there are maintenance feeds included in the HOA.
Who Fixes What?
You'll also need to clarify who fixes what if something breaks. Certain things may be under warranty, like appliances and flooring, but ask about outside features as well.
What Upgrades Are Available?
The model home will show you countless upgraded features, so be sure to clarify what's been upgraded and what's standard. Keep a list of what you'd like upgraded and cut it down from there depending on your budget.
What Are Some Design Center Upgrades to Avoid?
There are a few things you should avoid upgrading at the time of purchase. Builders sometimes don't have the best upgrade options and you can swap it out after you move in for a lower cost.
Avoid upgrading the following items:
- Plumbing fixtures
- Cabinet hardware
Can I Choose my Floors, Paint, and Backsplash?
Most preconstruction townhouses allow you to select your paint, flooring, and backsplash. You may only be able to choose from a few different options for some of the features, so ask the sales rep those questions when viewing the model home.
Is Purchasing a Preconstruction Townhouse Right for You?
Buying preconstruction townhouses in Toronto gives you a great opportunity to get into a sought-after urban area at a lower cost. When you get in during phase one pricing, you're able to customize your home and save money.
The builder often recommends a mortgage lender that they like to work with but you don't necessarily have to go with that. Work with Insurdinary to find the best mortgage rate available.