[izomax]

Pre-construction condo questions

I am a new to pre-construction condos and I have some questions. Here a typical advertisement of the deposit structure:

$2000 with offer, balance to 5% in 30 days, $1000 every 3 months until occupancy and 5% on occupancy.

1. Does "balance to 5% in 30 days" just mean 5% of the outstanding balance?
2. When should I talk to the bank to get my mortgage? Now or on occupancy?
3. What if the condo construction got delayed?
4. Are pre-sales condo price negotiable? How many % can I expeceted?

Thanks!

 

[AKS]

I am a new to pre-sale condos and I have some questions. Here a typical advertisement of the deposit structure:

1. Does "balance to 5% in 30 days" just mean 5% of the outstanding balance?
2. When should I talk to the bank to get my mortgage? Now or on occupancy?
3. What if the condo construction got delayed?
4. Are pre-sales condo price negotiable? How many % can I expeceted?

Thanks!

1. Balance means 5% of the cost of your purchase price minus the $2000 deposit.

2. You should get a pre-approved mortgage when you purchase. Sometimes builders want to make sure you can borrow. You will definitely need the mortgage few weeks before it closes if you're a last minute person.

3. If construction is delayed, it's delayed. They have up to 3 times I think to delay I think.

4. Pre-sale is negotiable up to a point. How much you can negotiate will vary. If a condo is very popular, its hard to negotiate.

 

[izomax]

1. Balance means 5% of the cost of your purchase price minus the $2000 deposit.

2. You should get a pre-approved mortgage when you purchase. Sometimes builders want to make sure you can borrow. You will definitely need the mortgage few weeks before it closes if you're a last minute person.

3. If construction is delayed, it's delayed. They have up to 3 times I think to delay I think.

4. Pre-sale is negotiable up to a point. How much you can negotiate will vary. If a condo is very popular, its hard to negotiate.

Thanks for the response.

If I buy a pre-construction unit now and the oocupancy date is 2010, at what point in time do I start paying mortagage? Now or 2010?

 

[Wooba]

Thanks for the response.

If I buy a pre-construction unit now and the oocupancy date is 2010, at what point in time do I start paying mortagage? Now or 2010?

It will be after you move in.. could be the next month, could be several months later. You do not "own" your unit when you take occupancy.

 

[izomax]

It will be after you move in.. could be the next month, could be several months later. You do not "own" your unit when you take occupancy.

Will bank lock interest rate for that long? If I get pre-approved for 4% now (5 year term), but when I actually take occupancy 2 years from now, the interest rate has raised to 6%, then I am screwed?

 

[Wooba]

Will bank lock interest rate for that long? If I get pre-approved for 4% now (5 year term), but when I actually take occupancy 2 years from now, the interest rate has raised to 6%, then I am screwed?

It would depend on whatever deal you make with the bank. They will usually hold a rate for a certain length of time, but it's possible it could take so long before you need it that the rate will be higher.

 

[amitkalia]

New builder condos question

I am a new to pre-construction condos and I have some questions.
Balance means 5% of the cost of your purchase price minus the $2000 deposit
When should I talk to the bank to get my mortgage? Now or on occupancy?
What if the condo construction got delayed?
Are pre-sales condo price negotiable? How many % can I expeceted?
Thanks!

Say your condo is $200,000, you gave $2,000 deposit. Then the balance of 5% will amount to $10,000 less $2,000=$8,000

Getting pre-approval now is the right way to move ahead. The builder's bank often provides construction financing and they will be able to give you a commitment letter.

Construction can be delayed. Read more about construction delays on my blog.

Builders are already offering many deals out there. Before you buy a new builder condo you should ask many questions. Good clauses can benefit you in many ways. These might be added on request. Many avid real estate investors, lawyers and or brokers do this on regular basis. Sometimes extra conditions, upgrades, freebies etc. can compliment builders' discounts.

 

[Wooba]

Amit,

I was reading your blog regarding delays to occupancy.
I have an agreement from Jan 2006 that gave me a tentative occupancy date of March 2008.

I was sent a letter in Nov 2007 telling me my new tentative date would be Sept. 2009.
In April 2009 I was sent another letter revising that tentative date to Feb 2010. It also advised that that date would be confirmed after the roof structure was completed.

I'm confused as to where I would sit regarding compensation (if any)?

 

[newbuyer]

Amit,

I was reading your blog regarding delays to occupancy.
I have an agreement from Jan 2006 that gave me a tentative occupancy date of March 2008.

I was sent a letter in Nov 2007 telling me my new tentative date would be Sept. 2009.
In April 2009 I was sent another letter revising that tentative date to Feb 2010. It also advised that that date would be confirmed after the roof structure was completed.

I'm confused as to where I would sit regarding compensation (if any)?

I second to that. When we should start to count the days of the delays to get compensation?

 

[AKS]

Amit,

I was reading your blog regarding delays to occupancy.
I have an agreement from Jan 2006 that gave me a tentative occupancy date of March 2008.

I was sent a letter in Nov 2007 telling me my new tentative date would be Sept. 2009.
In April 2009 I was sent another letter revising that tentative date to Feb 2010. It also advised that that date would be confirmed after the roof structure was completed.

I'm confused as to where I would sit regarding compensation (if any)?

They're allowed to notify you to delay 3 times. Seems like they've delayed 2 times. They're allowed to send you another notice.

1) Sept 2009
2) Feb 2010

 

[simuls]

I believe that the Tarion rules are 3 delays to a maximum of 24 months from the original tentative occupancy date. So if you had March 2008, the most they could delay for without owing you anything is March 2010. That being said, they could also send you a letter asking you to extend farther and give up your right to compensation, or void the contract and get back your deposit (which they know would be an insane thing for you to do because you've gained a lot of equity since 2006). It not an uncommon thing for developers to do and completely negates Tarion's power - something of course that is counter-logical, but does show how useless Tarion is and how the power is all in the hands of the builders.