Even though sales have cooled down in major Canadian markets like Vancouver and Toronto, it doesn’t mean prices are following behind in the same way.
According to the Toronto Real Estate Board, February 2019 saw lower home sales than the previous year, but prices still trickled higher by about $13,000 compared to 2018. Further, there were 1,064 condo units sold in Toronto last month versus around 640 detached and semi-detached homes combined.
This just goes to show you that costs are still increasing, and condo sales are still dominating Toronto's market.
So how can you save enough in order to beef up your down payment? Consider opening up a Tax-Free Savings Account and funnelling as much money into it as possible over a set time frame of your choosing.
Start saving for the down payment early on
Pre-construction units will have different down payment structures than resale units.
The bigger down payment you make, the less you’ll have to repay with a mortgage loan. You can save even more money by making simple cost cutting measures in your daily life.
It's relatively easy to stop splurging on lunches at work. If you’re buying lunch a few times per week, this translates to over $100 per month. Same with any to-go coffees or after work dinners. Spend Sundays making big batches of healthy meals, and portion them out for each day of the week.
You can take up other drastic cost cutting measures, temporarily, until you’ve hit your savings goal.
Cut down your phone bill by switching to a budget provider and save $20 at minimum per month. Cancel your gym membership. Move back home with your parents for a bit. Bike or take transit instead of driving. You get the idea.
Decide on pre-construction or resale
Pre-construction and resale options can make a world of a price difference. These days, it’s important to note that some high demand pre-construction builds are matching the prices of resale condo units already on the market.
Consider both the increase in value for the contract you purchase for a hypothetical pre-construction unit after the building is completed, and the leap in value for a resale condo unit at a similar price, over three to five years.
If you buy resale, you can live in it immediately, or rent it out, meaning quick income for the buyer. Average rents on a one bedroom are around and above $2,000 per month in the city.
If you buy pre-construction, the payments aren't required in a lump sum which gives you more time to budget. So really, deciding between pre-construction and resale will depend upon your timeline, budget and intentions with the unit.
Look for shared amenities
Depending on how many people in your building or condominium complex are sharing the cost of amenities, your condo fees could range in cost.
If you buy into a complex that has a few condo buildings that share localised amenities, costs can be lowered for extras (like swimming pools or saunas) because they’re shared with more people in the complex.
Plus, since the amenities are intended for a larger group of people, they'll usually receive better maintenance and cleaning attention because they'll be used more frequently.
The difference between older and newer builds
Older buildings tend to have larger floor plans than newer builds, which are being built smaller as lot sizes shrink and space in the city comes at a premium.
Even 10- to 15-year-old buildings will have larger floor plans than new buildings, while the price per square foot will likely be lower.
Finishes might need updating, but renovations are investment opportunities in themselves. If you can make a dated unit with a large floor plan look modern and sleek, who wouldn’t want to live there come resale time?
Your location can save you money in more ways than one
You can save money by changing the physical location of your building in the city, and by changing the floor your unit rests on.
You can buy the same unit at different prices depending on its geographical location. Units downtown can range drastically in price, costing between $10k and $100k more than the same unit in a neighbourhood just off the beaten path.
The same unit on a lower level is also generally cheaper than the same higher up. If your view is obstructed, that can just mean more savings.
Consider the extras
Parking and storage locker spaces are usually recommended by realtors to bolster your unit’s resale value, but if you’re looking to save money on a condo, cutting these things out can save you money in upfront costs.
Plus, you can rent these spaces for a fraction of the $10,000 to $50,000 price tag if you really need them. Prioritize your needs and cut the rest.
See if you qualify for any rebates
Always consult a tax professional or real estate lawyer concerning all applicable tax credits and rebates. Combining these government rebates can grant you a good return on your taxes, thus cutting down the total costs of the purchase.
The following tax breaks are intended to cut down on your mandatory closing costs and land transfer taxes.
- First Time Home Buyer Tax Credit
- City and provincial land transfer tax rebate
- Land transfer tax refund
- GST/HST New Housing Rebate