Adding to what Westopher has already said:
When I was looking for my apartment, I've been told by different developers that they need anywhere between 15 - 30%'s worth of down payment. When I bought the place, I paid a $1k deposit on the unit right away. And then I had 7 days to pay off the remainder of what amounts to 5% of the purchase price as down payment. During this initial 7 day period, I had the option to cancel my purchase and get the full refund back.
The next 5% down payment is due within 30 days after the initial $1k deposit. And then there was a third 5% payment due within 3 months, I think. So up to the ~3 month mark, I paid 15% worth of down payment.
At the time when I was asking, my bank told me they will approve a mortgage that is worth up to 80% of the unit if it was my primary residence, or 70% if it was an investment unit.
By law, I can't remember how long a developer has to complete the building -- it should be somewhere between 18 - 24 months at most. The sales person will tell you a completion date, but take it with a grain of salt. I was told to expect a completion date in Oct / Nov when I paid the deposit when the project has just started. The building wasn't completed until next July, and for some reason, we weren't notified until late Aug even though others have already started moving in by late July. In any case, the absolute date for completion is written in the contract for pre-developed units, so make sure you ask to see that.
Do not expect a new building to be trouble-free. There is going to be a lot of little (or big) problems happening. In the new condos / apartments I've lived in, I have experienced at least the following:
- a central HVAC unit (for the common area of whole building) breaking down, but the developer refused to take responsibility. It took some legal action from the strata before the developer finally caved, and the deal dragged on for well over a year.
- The hot water tanks system that the developer installed failed 3 times within the 5 year warranty period. Strata was told that this type of system is much cheaper to install, but generally only has a life expectancy of something like 3 - 5 years. So when the building's 5 year warranty was about to expire, strata voted to have the entire thing replaced with a different system that was a lot more reliable, but also a lot more expensive.
- A valve of some sort in bursted multiple times (albeit at different levels), causing water damage to multiple units. The home owners had to be evacuated from their own newly purchased home for a solid 3+ months, and there were all sorts of issues when it came to insurance claims. This one is really too long to summarize here.
- The 2 elevators regularly stop functioning. Koni was the elevator company, and they could fix it in the morning, and only have it break down again in the afternoon. For months, there was only 1 elevator in a semi-working state, and that one doesn't go to the lobby / main entrance where the mail boxes are.
- The in-suite HAVC was dying in some units of the building, and mine was one of the affected ones. I think I had gone through 2 replacements before the problem was finally fixed, but one of the waits happened during winter because the replacement unit was on national backorder, and my unit was without central heating for a solid 3+ weeks.
Maybe I was super unlucky to be stuck with all that crap. But at the end of the day, don't assume things will be fine in a new building. From the lessons that I've learned, the only thing I can say about a new building is that it comes with the 2-5-10 warranty. I was very fortunate in the regard that I have almost always lucked out with a very good strata council that kept on pursuing the developer, but you can't always count on that.
As far as strata is concerned, I seem to think that it doesn't get formed until at least 50% of the units has been taken possession (by home owners). Some of the problems (pipe bursts and elevator problems) happened before strata was formed, so home owners were dealing directly with the developer at the time, and it wasn't pleasant.
If you are buying with the intention to have the place as your own primary residence, my biggest advice is to buy a place that you think other owners will also be using the place as their primary residence. If they are investors, they are more likely to not give a shxt about the long term maintenance issues of the building. Rental tenants are also more likely to not care about the long term maintenance and condition of the building as well.
Quote:
Originally Posted by Araaadi
Noob over here:
Can anyone school me on purchasing a pre-developed place?
Looking to purchase my first place in the next few years, and I really like the idea of developments because I can have the warranty, and a place built to my liking instead of having to do renovations in the future.
Would I need more than the standard 5% down for first time home buyer?
How would a mortgage work? Start after the place is fully built?
Are stratas established before place is done? (To see if strata fees will be ridiculous?)
Do I choose the unit/floor while doing the presale?
Asides from my initial downpayment, what other fees should I be expecting to have upfront?
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