Buying a home is a huge step, and the process of pre-construction home buying in Canada can be exciting and overwhelming.
If you want to buy a new home that has yet to be built, follow these essential steps to ensure a smooth transaction.
Here’s what you can expect during the pre-construction home process.
Key Steps to Buy a Pre-Construction Home
When you buy a new home in Canada before it’s even built, you enter the pre-construction home-buying process.
Buying a new house designed just for them is different from purchasing an already-built home, but many people love it.
Step 1: Research and Find a Real Estate Developer
The first step in buying a new construction home is finding a reputable real estate developer.
You want a developer with a good track record of delivering quality homes on time.
Take your time to research different builders and their previous projects. Look for reviews or ask friends and family for recommendations.
Step 2: The Pre-Sale Agreement
Once you’ve found a developer and a home you like, the next step is signing a pre-sale agreement. This agreement outlines all the details about your new home, such as the price, floor plan, and estimated completion date.
You’ll also agree on the deposit for your new home at this stage. The deposit is typically around 5% of the home’s purchase price, but it can vary.
Remember that Deposit Protection is available, which helps ensure your deposit is safe, even if something goes wrong with the developer.
Step 3: Mortgage Pre-Approval
Before you sign any agreements, you must get mortgage pre-approval. This step shows you how much money a lender will lend you.
With new build financing, you’ll work with your bank or a mortgage broker to secure a loan for your new home. It’s a good idea to talk to the best brokerage in Canada for help.
Getting pre-approved will also help you feel confident that you can afford your new home.
Step 4: Construction Timeline and Delays
Once you’ve signed the agreement and secured your financing, the construction of your new home will begin.
However, construction delays can happen. Weather, materials availability, or labour shortages can cause delays, so staying flexible is essential.
Ask your developer regularly for an updated construction timeline so you can keep track of progress.
Step 5: The Home Purchase Agreement
The home purchase agreement is a legal document that formalizes the sale between you and the developer.
The agreement outlines the final price, payment schedule, and what happens if the construction delays occur.
Be sure to review the agreement carefully. It’s also a good idea to have a lawyer review the contract before you sign it to ensure everything is clear.
Step 6: Home Inspections
As your new home nears completion, you’ll want to schedule home inspections. These inspections help ensure the house is built to code and is safe.
You can hire an independent expert to inspect the property and look for any issues. Inspections may reveal small issues that need fixing before you move in.
If there are any problems, ask the developer to address them before you close on the property.
Step 7: Closing Costs and Occupancy Fees
When your new home is almost ready, it’s time to prepare for closing costs. These are the fees you’ll need to pay to finalize the sale.
These can include legal fees, title insurance, and registration costs. Be sure to budget for these costs, as they can add up.
You may also need to pay an occupancy fee if you move into your home before the official closing date. This fee covers the developer’s costs while they finish any remaining construction. Once the property is officially yours, the fee will end.
Step 8: Moving in and Builder Warranty
Once everything is final, you can move into your brand-new home. Most new construction homes come with a builder warranty, which means the builder will cover any repairs or issues that arise within a certain period.
In Canada, home warranty protection is required by law in many provinces. This guarantees that the builder covers you if something goes wrong with the house after you move in.
Step 9: Final Paperwork and Ownership
After moving in, you’ll need to finalize some paperwork. This includes transferring ownership from the developer to you. Once this is done, you’re officially the owner of your new home!
What are the Essential Things to Keep in Mind During the Process
- New Home Contract: Always review the contract carefully, and don’t hesitate to ask questions. It’s a big commitment.
- Construction Delays: Be prepared for delays. It’s familiar, but keep in touch with your developer.
- Deposit for New Home: Make sure your deposit is protected.
- New Construction Home Loans: Talk to your bank about financing options for your new home.
- Home Warranty Canada: Know your rights when it comes to home warranties.
Conclusion
The home purchase process in Canada can feel like a lot of work, but the reward of moving into a brand-new home is worth it.
The pre-construction home buying process may take some time, but it can be an exciting journey with patience and careful planning.
Remember to monitor construction delays and take advantage of deposit protection.
If you’re unsure, asking for help is a good idea.
Whether seeking advice about new construction home loans or learning about rebates and taxes for new home buyers, you can always turn to experts to guide you.
Buying a new home is a big step, but with the right knowledge and support, it can be an exciting and rewarding experience.
