What are the benefits and cons for purchasing a presale?
A presale can commonly be recognized as a property that can be purchased prior to being fully built or move-in ready. Hence, a presale can often allow buyers to find the right fit for themselves and their lifestyle.
Benefits for purchasing a presale
- New property: presale developments may incorporate more distinguished, advanced and up-to date finishes and technology compared to resale in the same price bracket.
- Options for extensive customization: presale developers may allow for customization of flooring, countertops, backsplash, layouts and several other valuable factors.
- Payment plan: many presales offer a payment plan meaning you only have to pay a deposit between 5-25% of the purchase price depending on the project.
- Can potentially save more: mortgage payments do not begin until the home is completed and move-in ready meaning there is a chance you can save and increase your down payment. Presales can be great for individuals who are not yet qualified for a mortgage but still have a down payment.
- Property transfer tax exemption: newly built homes that are worth up to $750,000 are exempt from PTT. The exemption may allow for savings of up to $13,000.
- Warranties: presales come with a 2/5/10 warranty which can allow for increased security with purchase in the long run.
- Incentives: developers may offer extra upgrades, decorate allowances or contractual incentives such as coverage of taxes on the property for a set amount of time.
- Presale condos may be cheaper than resale condos.
Cons for purchasing a presale
- Does not meet expectation: there may be a chance that the chosen finishes or layout of the property will not meet your final expectations.
- Delay: construction delay is a possibility as the completion date for a presale is often an estimate.
- Wait time: may need to wait 1-3 years before the presale property is fully constructed and move-in ready.
- 5% GST: There may be a 5% GST applicable on new construction in addition to the purchase price.