With Toronto condo prices meeting the sky, first-time buyers are faced with serious competition for a condo that doesn't break their bank. We have accumulated some expert advice to heed before starting your condo search, so that you will be ready to get the best bang for your buck.
Know your budget
Before starting to look for a suitable condo, its best to be honest about what you can afford. First things first, take a stock of your savings and what you can spare for a down-payment. For properties below $500,000 the minimum down payment required is 5%, excluding the cost of mortgage insurance. You will also need to set aside an amount to cover the closing costs, such as legal expenses and transfer tax. This adds up to another $15,000 for a $500,000 property. Make sure you have enough in savings.
Get a Mortgage Pre-approval
Once you have worked out your finances, you need a mortgage pre-approval. This gives you a heads up on the actual rate you will qualify for when seeking a mortgage. However, don't gloat over the pre-approval, since the actual amount you will be approved for isn't always that generous. Not to mention, you will have to pass a stress test which entails you to qualify at a rate of 5.34% or 2% higher than the negotiated rate. Especially, first time buyers should find a trustworthy mortgage broker and discuss all the nitty gritty details before they pose a problem down the road. A qualified mortgage broker can help you optimize your finances before you apply for a mortgage to help you get the best rate.
Setting Your Expectations When Buying on A Budget
Don't just settle on the first property you like when buying on a budget. Expect to roam around the market a lot. Not to mention, if you don't want to break your bank, know that you might have to live with a shorter wish-list.
Space
Another area where you will have to compromise on is the square footage. With property prices on the rise, $1,000 per square foot on average, you can't get it all. For a budget of around $500K per say, expect to get a condo with a 500-600 square foot floor plan. Or even less if you also want the extra parking space in the same amount. No worries. Declutter and make the best possible use of the space.
Consider the Parking
If parking is in your list of must-haves, good luck finding a condo that offers parking within your budget, and I am not talking about a Micro condo here. Even two condos in the same building can average a $50,000 difference, if one offers parking and one doesn't. If parting with your car is an option, look for a condo along the subway line. Not only will you be saving money, but in the long run, condos on transit lines appreciate faster than those which aren't.
Compromise on the Location
You can't be rigid when it comes to location. Location sells more than the condo itself. If you have your heart set on a particular neighbourhood, but you know you will never find anything decent there within your budget, be open to looking in other neighbourhoods rather than settle for something less. You can find more favorably priced properties in an area that reveals signs of gentrification. As a bonus, expect to see prices soar in the years to come and get a great return on your investment.
Do not Let Amenities Tempt you
Condo amenities are like a customer magnet, but no matter how much you are tempted by the promises of better amenities, know that more amenities translate into higher monthly maintenance fees. Smaller boutique condos and older condos also entail a higher maintenance fees, which is something you need to know. But then there are other factors to consider. For instance, an in-building gym might save you a fortune on gym membership. So, pay for what you can get and leave out the rest.
Brace up for Bidding Wars
Well-priced condos are always high in demand, especially those priced between $400,000 and $500,000. Check out Torontocondoteam.ca to see if you can find a lot of condos up for sale in this range. With such a palpable competition, a price that is too good to be true will be tough to get your hands on. Desirable condos with an attractive price tag will inevitably get tons of offers. Offer on every condo you find desirable. Might be you will close the deal on a good one, even if you lose out on a few.
Save Where You Can
Even within a building, not every condo is priced the same, so this is one area you can further save up on. For instance, interior courtyard facing units come at discounted prices, as do those with obstructed view! Similarly, condos located in the proximity of a garbage chute are reasonably priced as well. Similarly, if you are prepared to live without your own private outdoor space, you can reduce your purchase price further and instead, stick to your building's common outdoor space. Think of all the elements you are prepared to live with or without that can help you save more down the road. Remember, if its your first time investing in real estate, a condo is the perfect first in the real estate path. Once you earn significant equity in Toronto's condo market, you can sell and buy a better house down the lane; one that check off all your boxes. One step at a time.
Be Prepared to Move Quickly
In such a highly competitive market, as soon as you find a property you want to offer on, expect the process to rush on. There are two things you can do ahead of time to be ready when the perfect property comes along. First, you need to have your deposit money in hand. Second, ask your realtor to send you an Agreement of Purchase and Sale to look over.
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