Condos are the perfect home ownership solution for many millennials and baby boomers alike. This is because they are sold at a lower price point and are abundant in urban landscapes. Those just starting out in life see them as an opportunity to get on their feet and achieve independence quite possibly for the first time. More experienced adults see condos as an efficient way to cut down on their living space now that their children are grown and moved out-when a large family home is no longer practical or affordable.
The condo is strong in the Toronto market these days, and now could be the time to strike on this living opportunity. But before you make that decision, there are five things that you must consider first.
Does the Area Suit Your Needs?
Condos typically exist in urban areas of Toronto, where a quiet, country lifestyle simply isn’t possible. Are you capable of living in such an environment happily? Is living near shopping, school and work of great importance to you? Will a condo provide you the kind of space that you need? Many of these questions are the same as if you were asking about buying a house, but special considerations need to be taken because of the locations of your typical condo.
Is it Affordable to Buy a Condo?
There are generally two options to consider when this question is asked:
- Pre-constructed condos that are being resold
- Brand new buildings that have never had a previous owner
It would stand to reason that the pre-constructed condos would be the more affordable option, but this isn’t always the case. Because these condos are already in the possession of an owner and can be lived in as soon as they are sold, existing owners can rightfully ask for a higher price.
Can You Meet the Mortgage Conditions?
As with buying a house, buying a condo typically entails obtaining a mortgage from a lender. Whether the condo is pre-constructed or brand-new, the lender may attach their own set of conditions before they will finalize any mortgage. Particularly, they will have their own appraiser do an appraisal of the property. Your mortgage request can be accepted or rejected based on the number given by the appraiser.
Most typically, mortgages are granted in cases where the buyer is requesting a mortgage amount equal to or less than the amount quoted at the end of an appraisal. Sometimes if you’re buying from a builder your property may increase in value even before you’re required to make additional down payment contributions. In cases like this you can try to get additional financing like a second mortgage in Toronto to come up with funds for down payment.
Other conditions are likely to be added to this. Matters like your annual take-home income will affect how readily a lender will loan you the amount that you have requested.
What Happens if You Enter a Bidding War?
Bidding wars are common where condos are concerned on the Toronto real estate market. Because they are doing so strongly on the market, there are many people who are selling as well as many people who are looking to buy. This sometimes means that more than one or even two people will end up trying to out-bid one another to “win” the condo for themselves. Here are some tips and facts to consider if you ever end up in a situation like this:
- Be prepared to make your first offer your final offer. Oftentimes there will be no chances to negotiate.
- Understand that the seller ultimately has the right to sell to whomever they choose-even if they did not provide the highest offer.
- Sometimes it is best to walk away when the prices get too steep. Winning a bidding war for the sake of winning could put you in a precarious financial spot.
Consider Local Alternatives
If there’s one thing that everybody knows about living in Toronto, it’s that it can be pretty expensive. Real estate prices have gone through the roof, leaving some people scrambling as they try to take their first steps toward home ownership. Fortunately, there are many areas surrounding Toronto (like Kingston) wherein condos are in nearly equal abundance while being lower in price. If this is the case that you find yourself in, look to cities and towns near Toronto that are still relatively urban in nature. This is where you are more likely to find condos that will suit your lifestyle needs.