October 27, 2011
Purchasing a Condo in Canada
Often in major urban centres, particularly in Toronto, where condo prices have seen as much as a seven to nine per cent increase in line with demand, condominiums are the more cost and lifestyle efficient choice for on-the-go cosmos or first-time buyers. Condos are usually much cheaper than a detached single-family dwelling and provide conveniences such as snow removal, lawn mowing, external upkeep and recreational common areas.
However, condos also come equipped with one added cost that detached homes, or duplexes, do not – Condo fees. In Toronto, these average 55 cents per square foot, or roughly $550 per 1,000 sq. ft. In some circumstances, these fees are nearly as high as the cost to rent an apartment of virtually the same size.
Before you put in your offer on a condo, it is essential that you determine what these fees amount to; if they will affect your financing and what they give you in return. A portion of the fees should be allocated to a reserve fund for shared area repairs, such as elevator break down and a portion to cover a service such as: water, waste or even cable.
You and your realtor need to do your homework on the condo association to which you are going to be bound to. Ensure that they are financially solvent and have been accumulating reserve funds; otherwise when it comes time to make a major repair or renovation to the property, your door could be knocked on.
Also keep in mind that 50% of your expected condo fees will be tacked onto your monthly expenses when the amount of financing you qualify for is being determined. Earlier this year it was under consideration that that figure be increased to incorporate 100% of the fees.
The best way to ensure that you can afford the condo and the fees it comes with is by using a mortgage qualification calculator. If you estimate fees to be $150/month and really they turn out to be $500, you may not qualify for the financing you need to purchase the condo you are looking at. That’s why it is in your best interest to ascertain these fees so that your mortgage pre-approval numbers are as accurate as possible and you are not disappointed to discover that your dream condo does not really fit within your budget.
As with any home purchase, before you commit to the condo in mind have the property inspected and your proposed contract with the condo association reviewed before you sign anything binding. Condos can make for a good investment property later down the road and are a nice transition between renting and home ownership. If the fees and association have you discouraged, consider adding semi-detached townhouses or duplexes to your listings search as well.
This article was provided by CanEquity.com.