One of the initial choices you’ll face when starting your home search is deciding between purchasing a previously owned home (resale) or a new construction. Within the new home category, another option is to buy a property before construction has started, known as a “presale.” Opting for a presale home offers several benefits:
- Customization Opportunities: Buying a presale home often allows you to customize various features of the property, such as flooring, cabinetry, and fixtures. This means you can tailor the home to your tastes and preferences even before you move in.
- Property Transfer Tax Exemption: Newly built homes valued up to $1,100,000 ($750,000 if the title is registered before April 1, 2024) qualify for an exemption from the property transfer tax, potentially saving homebuyers up to $13,000. To be eligible, buyers must be Canadian citizens or permanent residents and must occupy the home as their principal residence for at least one year following the purchase.
- Potential for Appreciation: When you buy a home during the presale phase, you are investing at the current market price. By the time the home is completed, the market value may have increased, providing you with potential equity gains.
- New Home Warranty: According to the Homeowners Protection Office (HPO), homes constructed by Licensed Residential Builders are covered by a mandatory third-party home warranty insurance known as the 2-5-10 Home Warranty Insurance Program. This includes a minimum of two years of coverage for labor and materials, five years for the building envelope, and ten years for the building’s structure. In contrast, resale homes may not come with any warranties, leading to higher overall costs.
- Modern Amenities and Design: Presale homes are built with the latest construction techniques, energy-efficient systems, and contemporary design trends. This often means lower maintenance costs and improved comfort compared to older homes.
- Lower Initial Costs: In many cases, developers offer incentives for presale homes, such as lower down payments or promotional pricing. This can make it more affordable to secure a new property and manage your finances effectively.
- Time to Plan: Since presale homes are not immediately available for occupancy, you have more time to arrange your move, sell your current home, or save additional funds. This can reduce the stress associated with relocating.
- Opportunity to Build Your Down Payment: When you buy a presale home, you can make smaller, staggered deposit payments, which allows you to save more towards your down payment before your home is completed. Additionally, some financial institutions may lock in your interest rate for up to 36 months, protecting you from rate increases by the time you finalize your purchase.
Overall, purchasing a presale home can be a strategic and rewarding decision, offering both financial and personal benefits.
There’s a unique joy in moving into a brand new home that no one has ever inhabited. Much like experiencing the thrill of sitting in a new car for the first time, you will have the honor of leaving your mark on the space. Additionally, this means that the appliances, mechanical systems, and other features are at the beginning of their warranties and lifespan, ensuring that you shouldn’t face any immediate repairs or replacements.
