Congratulations on purchasing a pre-construction home! Now that you’ve made this significant investment, it’s essential to take the right steps to ensure a smooth and successful process moving forward. In this article, we will guide you on what to do after purchasing a pre-construction home, highlighting the importance of involving a lawyer and obtaining a mortgage pre-approval within the specified timeframe.
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Secure Legal Guidance
Immediately after purchasing a pre-construction home, it’s crucial to seek the assistance of a real estate lawyer. Your Agreement of Purchase and Sale (APS) contains legal terms and conditions that require careful examination. A lawyer can review the agreement and often negotiate terms with the developer within the 10-day cooling period. They can also guide you through the various stages of the process, including negotiations, contract amendments, and final closing.
Review and Understand the APS
Take the time to thoroughly review the APS, ensuring you understand all the terms and conditions outlined within it. Your lawyer can help clarify any ambiguous clauses and ensure that you are fully aware of your rights and responsibilities. Pay attention to crucial details such as completion dates, construction milestones, deposit amounts, and any potential penalties or charges for contract breaches.
Obtain a Mortgage Pre-approval
Most developers require buyers to obtain a mortgage pre-approval within a specified timeframe after signing the APS. This is an important step as it confirms your ability to secure financing for the purchase. Contact multiple lenders to explore your options and obtain preapproval letters that outline the maximum loan amount you qualify for. Submit the pre-approval documents to the developer within the designated timeframe to fulfill this requirement.
Plan for Closing Costs and Budgeting
While you await the completion of your pre-construction home, it’s crucial to plan and budget for closing costs. These costs are not included in the purchase price, therefore you will need to have this amount saved up separately as they will not fall into your mortgage. Closing costs typically include land transfer taxes, legal fees, title insurance, development charges, and other administrative expenses. Understanding and preparing for these costs in advance will help ensure a smooth closing process once construction is complete.
Prepare for Closing and Move-In
As the construction nears completion, you will receive a notice of occupancy or a firm closing date from the developer. Work closely with your lawyer to ensure all required paperwork and funds are in order for the final closing. You will also be required to conduct a pre-delivery inspection (PDI) prior to occupancy. This inspection will allow you to note discrepancies and deficiencies.
Purchasing a pre-construction home in Toronto is an exciting milestone. To ensure a successful and hassle-free experience, it is crucial to involve a real estate lawyer from the beginning, carefully review the Agreement of Purchase and Sale, obtain a mortgage preapproval within the specified timeframe, plan for closing costs, and prepare for the final closing and move-in.
Looking for a pre-construction unit to call home? We’re here to help! We have real estate agents in your city ready to guide you through the whole pre-construction process. Give us a call to get it started today.
