Condominium living can be an appealing option, especially for those in a big city. Condos are affordable and someone else takes care of maintenance and upkeep, such as shovelling the snow, cutting the grass or even replacing the roof. In addition, many condominiums have enhanced security features and some offer a range of social, entertainment and recreational activities.
However, condos are a unique type of ownership structure and potential owners should be aware of special considerations surrounding the purchase of a condo, which are different from a conventional home. According to the Canada Mortgage and Housing Corporation (CMHC), when you purchase a condominium, you own a private dwelling called a unit. The unit is registered in your name. You also share ownership of the common elements and assets of the building. It’s important to be aware of your unit’s boundaries before you purchase. You’ll want to know, for instance, whether you’ll be paying for window washing or whether the condominium corporation will be responsible for this. This information can be found in the condominium’s governing documents. In addition to paying for your unit and a share of the common property, you will also pay monthly condominium fees. This is intended to cover the upkeep and replacement of common elements. The fees also pay for the corporation’s insurance policies, utilities and services such as snow removal, CMHC notes. Some of the fees may be put into a reserve fund, which is intended to cover the estimated cost of future maintenance and repairs. Some provinces require that condos conduct a regular reserve fund study, which can tell unitholders how much should be paid into the reserve fund. The study is a detailed examination of all of the condo’s components along with an analysis of future replacements and repairs, including costs. Keep in mind that condominium fees can be raised to reflect the changing costs of operating a building and the state of the corporation’s reserve fund. Condos also have rules and bylaws that unitholders must follow. These cover contentious issues related to condo living, such as pets and parking. Make sure you carefully review the condo’s bylaws before you make an offer. Condominiums offer an attractive lifestyle, but they’re not for everyone. For instance, you won’t have a private garden and you’ll likely have limited storage space. But for many people, condos offer an ownership option without the hassles of maintenance and repairs. And even with additional fees, condo living is less expensive than home ownership. That may be the biggest reason for the condominium’s enduring popularity. Purchasing a new home can be an exciting time, especially for first-time homebuyers. But before you start popping the champagne, make sure you are properly prepared. Here are some tips aimed at first-time homebuyers.
Pay Off Your Debts Owning a home is expensive, usually much more than renting, with additional maintenance and upkeep costs. So don’t even think about buying a home until you have paid off all your debts. Credit card debt is the worst in terms of interest rates, but you should also try to tackle long-term debt such as student loans. Experts also suggest building an emergency fund that will cover 3-6 months of expenses. Determine How Much House You Can Afford Before you get attached to a beautiful house, check your monthly budget to determine exactly how much house you can afford. You need to leave room in your budget for added expenses, so make sure your total monthly housing costs (including property taxes and insurance) add up to no more than 25-30% of your monthly take-home pay. For example, if you bring home $5,000 a month after taxes, multiply that by 25% to establish a monthly maximum house payment of $1,250. Save for a Down Payment It’s unrealistic to expect to pay cash for your first home, but you should aim to save enough for a down payment of at least 20%. If your down payment is less than 20% of the price of the home, you’ll need to purchase mortgage loan insurance. And if you’re self-employed or have a poor credit history, you may also be required to get mortgage loan insurance, even if you have a 20% down payment. Get Preapproved for a Loan If you are confident you have enough money saved to cover a 20% down payment (as well as closing costs), you’re ready to handle the other 80% by talking to a mortgage lender. Getting a pre-approved loan shows to sellers that you are a serious buyer. It’s also a great way for first-time home buyers to get ahead in a competitive market. Your first home is a big deal – likely the biggest purchase in your life so far. Because of that, you don’t want to make mistakes. Consult a trusted real estate professional who can help you to find a home, negotiate a deal, and see the process through until closing. |
Cecil Darren Frank - Toronto Real Estate AgentArchives
October 2019
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