If you’re in the process of searching for a home, you may be considering whether or not to buy a pre-construction. While this is an attractive option for many, it comes with a few pros and cons that you’ll want to consider.

Let's explore the advantages and disadvantages of purchasing a pre-construction property in Canada.

The Pros of Buying Pre-Construction

  1. Lower price and maintenance fees: Buying a pre-construction home can result in a lower purchase price due to discounts and incentives offered by developers. As the first to live in the home, your appliances and equipment are brand new and may even last longer. This helps to reduce any repair or maintenance costs.

  2. Freedom to personalize: You have the freedom to customize your property to match your lifestyle and build the home of your dreams. This includes selecting finishes, appliances, paint colors and layout options – giving you a great amount of control.

  3. Enjoy brand new top-of-the-line features: You can experience the benefits of modern living with a pre-construction home’s latest features and appliances such as energy-efficient systems and smart home technology. This is often covered by a standard warranty.

  4. Be at ease with no bidding wars: When buying a pre-construction home, the price is fixed and there's no chance of a bidding war, which results in a calmer buying experience. You won’t have to go through the stress that often comes with being in an extremely competitive housing market.

  5. Investment opportunity and potential to build equity: This could be an excellent opportunity to see large gains in your property value. Many investors use this strategy to buy in early to a project, hold it for a few years to build equity, and then sell the property and pocket the increase in price.

The Cons of Buying Pre-Construction

  1. Delays and uncertainty: Construction delays may occur, which can result in a longer wait time before you can move in. You are essentially buying a property that doesn’t yet exist and this can be nerve-wracking for some buyers.
  2. Financial risk: Pre-construction homes may require a deposit of up to 20% of the purchase price, which can be a significant financial commitment. If the developer goes bankrupt or the project is cancelled, buyers may lose their deposit, or you can get it back but lose the investment benefits.
  3. You pay sales tax on new homes: Depending on your province, you may have to pay either the Harmonized Sales Tax (HST) or the Goods and Services Tax (GST) on your new home. You might be eligible for a rebate, but you will have to pay up-front and then apply for the tax refund.

Pre-construction homes in Canada offer lower prices, customization options and modern amenities, but can also come with uncertainty and risk. It’s important for you to do your research and carefully consider whether or not this is an option for you. At Homewise, our expert team will answer all of your pre-construction questions to ensure you’re making the right decision.

Whether you buy a resale home or pre-construction, our team of leading real estate agents and mortgage advisors are ready to provide you with key information to set you up for success.