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Everything You Wanted to Know About Condo Living

Real Estate

Everything You Wanted to Know About Condo Living


Are you looking at getting into the real estate market in the near future? Then chances are you’ve considered buying a condo. Condos are an attractive option for two main reason: affordability and lifestyle.

Condos tend to be more affordable than single-family detached homes, making them an attractive option for first-time homebuyers. Condos also tend to come with less responsibilities than houses. When you’re in a condo, you don’t have to worry about mowing the lawn or shoveling the sidewalk and driveway during wintertime, since someone else takes care of that for you. Condos fit the lifestyles of so many – singles, busy professionals and baby boomers looking to downsize, to name a few.

While condos may seem like the ideal property type, they aren’t without their downsides. There can be a bit of a learning curve for those who have only ever lived in a house. Here are some factors to consider when moving into a condo for the first-time.

New vs. Resale

Similar to houses, you’ll need to decide whether you’d like to purchase a new or resale condo. This decision mainly comes down to budget and personal preference. With a resale condo you can put down as little as five percent, but with a new condo the deposits and down payments are typically heftier. You usually need to put down 20 percent or more in deposits, staggered over several “milestone” dates. (If that amount is too much for you, you’ll either have to save more or go with a resale condo.)

Buying new does have its benefits. You can choose everything right down to the hardwood floors. Just keep in mind that upgrades can be costly. The trend is for builders to include less and less in the basic condo unit. So, be prepared to pay for upgrades, even for the most basic things.

Builder Reputation

Builder reputation matters, especially when you’re buying a new condo. You want your condo to be built to last. You don’t want to be worried about falling glass. Do your homework when buying a condo directly from a builder. Look at the builder’s other projects. Did the projects finish on time? Condo developers are notorious for delaying occupancy. The last thing you want to deal with is builder delays. Look for any complaints against the builder, too.

In Ontario, new condo buyers are protecting by Tarion. If the developer decides to skip town with everyone’s money, your deposit is protected up to certain limits.  That being said, although homebuyers have some protection when buying a new condo, a lot of the time they’re at the mercy of the builder. Condo developers are able to cancel projects for a whole host of reasons, leaving buyers out in the cold. This recent condo cancelled in Vaughan is the perfect example. The developer pulled the plug on the project, leaving 1,100 buyers in limbo. It’s at least the ninth condo project to cancel in the last year in the Greater Toronto Area. That’s why builder reputation is so crucial.


Similar to when you’re shopping for a house, it’s a good idea to get pre-approved for a mortgage when on you’re on the lookout for a condo. If you’re buying a resale condo, it’s pretty straightforward. You can call up your mortgage broker and typically get a rate hold with a lender for between 90 and 120 days. With a rate hold, if mortgage rates go up during this time, you’re guaranteed your mortgage rate. And if rates go down, you’ll get the lower rate. It’s a win-win situation for the homebuyer. But you can only take advantage of this if you take the time to get preapproved for a mortgage with your mortgage broker.

If you’re buying preconstruction, the financing works a little differently. Since the completion date for your condo may not be for two or three years, the typical mortgage pre-approval won’t work. Luckily, there are mortgage pre-approvals specifically for those buying new builds. You can often get a rate guarantee until the completion date of your condo project. Speak with your mortgage broker to find out your options.

Phantom Rent

Speaking of preconstruction condos, there’s a little something calling “phantom rent.” When you move into your condo on the occupancy date, it’s important to understand that you’re not the legal owner. As such, you can’t start paying your mortgage right away. Instead, you’ll be required to pay phantom rent. Phantom rent is an occupancy fee paid to your builder before the building is registered. Although occupancy can last for a few weeks, it can also last months, so make sure you budget for this extra time and expense.

Condo Ownership

Condos have a different ownership structure than the typical single family detached home. A condo combines the ownership of individual units, referred to as strata lots, with a combined ownership of common areas, referred to as common elements. Examples of common elements include the hallways, gym, swimming pool, elevators, parking garage and lobby. As the owner of an individual condo unit, you’re required to pay for the upkeep of the common areas by way of condo fees. A building’s condo board looks after the expenses of upkeep of the common areas with the condo fees.

When buying a condo, you’ll want your real estate lawyer to review the status certificate. The status certificate includes important information about the condo, including the condo fees and the building’s reserve funds. If a building’s reserve funds are low or the building is aging, it could mean your condo fees could skyrocket to cover the shortfall.

When shopping for a condo, be sure you find out what is included in your condo fees. Condo fees typically include utilities (heat and water), but quite often you’ll have to pay separately for hydro and cable. If that’s the case, make sure you budget for this.

Condo fees are normally based on the building’s amenities and your condo’s square footage. Typically, the more amenities, the higher the condo fees. For that reason, think long and hard before buying a condo with too many amenities. Although it can be convenient to have a gym in your building, you might be better off buying a condo without a gym and buying a gym membership separately. That way you won’t feel guilty if you aren’t making the most out of the gym in your condo building. Likewise, think twice before buying a two-bedroom condo versus a one-bedroom. Although it may have better resale value, the higher condo fees can be a real drain on your cash flow.

Cooling Off Period

Buying a new condo is a major financial decision. In fact, it could be the single largest financial transaction of your lifetime. For the reason, you’ll want to think long and hard before buying a new condo.

It’s not unheard of for you to suffer from buyer’s remorse. You put down the initial deposit, but change your mind a short while after. The good news is that you may be able to back out of the deal and get your money back. In Ontario you have a 10 calendar day cooling off period for new condos. During this time, you can send a copy of your contract to your real estate lawyer for review and call your mortgage broker to obtain financing. If you run into any snags along the way, you should be able to get out of the deal, provided the cooling off period hasn’t expired.

This post was written by Sean Cooper, bestselling author of the book, Burn Your Mortgage. Sean is also the managing editor ofmortgagepal.ca.

You may also be interested in:  Downpayment vs. Deposit- What’s the Difference?  

Writer: Sean Cooper 

Sean Cooper bought his first house when he was just 27 and paid off his mortgage at 30 in 3 years. An in-demand personal finance journalist, money coach and speaker, his articles have been featured in publications such as the Toronto Star, Globe and Mail, MoneySense and Tangerine’s Forward Thinking blog. He makes regular appearances on national radio and television shows to discuss personal finance, real estate and mortgages. He’s also the bestselling author of the book, Burn Your Mortgage, which helps anyone—from new buyers to experienced homeowners—achieve the

Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.

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