Buying your first home is an exciting time and a significant milestone in your life. Condos are a great buying option for anyone who wants to purchase a cheaper home, live in an urban area, or see their first home as an investment. If you buy a condo in a desirable area now, the chances are that you will be able to sell it on for a considerable profit in the future or rent it out for an extra stream of income. However, before you rush into closing a deal, there are plenty of things you need to know. Here are the top 6 things every first-time condo buyer should know.
1. Get pre-qualified for a mortgage
Before you start shopping around for your dream home, it is essential to find out how much money your bank is willing to lend you. The pre-approval should be given to you in writing and include an interest rate which is valid for 90 days. Pre-qualifying ensures that you know precisely what size mortgage you can get, and therefore what price-range you should be looking at.
2. Beware of occupancy fees.
There will be a period between you taking ownership of your new condo, and taking occupancy of it, during which you will be required to pay occupancy fees which do not go towards your mortgage. Typically, you will have to pay these fees for 6-12 months, so ensure that you budget for this to avoid being caught out.
3. Condo fees
Condo owners are also required to pay monthly condo fees which go towards maintenance, repairs, and services. Find out before you commit to buying exactly how much these fees are and what they cover, to ensure that you are not being ripped off and that they are within your budget.
4. Repairs and insurance
Some repairs may be covered by your condo fees; however, others may not be. This varies from building to building, so find out what the situation is before you commit to buying. You may also be covered for certain things by the insurance of the cooperation. However, you will most likely still need to purchase some insurance. Ensure that you are clear on this to protect yourself, your home and your possessions.
5. Find out exactly what you own.
When you purchase a condo, you will own your unit and a percentage of the common elements. There may also be some ‘exclusive use common property elements’ which are outside of the boundaries of your unit, but solely for your use. These often include balconies and car parking spaces. As you do not own them, there may be restrictions on how you use them.
6. Do your research into the condo developer and management company.
Before committing to a condo, research the developer and the management cooperation, as you don’t want to end up living in a poorly-run building, or purchasing from an inexperienced developer or one who is a severe amount of debt.