If you’re a millennial, you may be used to the idea that homeownership is out of reach. Fortunately, that’s usually not the case. It’s true that purchasing your ideal living space may come with a few challenges. That said, with a bit of strategy and planning, it’s possible to buy a home that meets all of your needs—at a price you can afford. The condo market is a great place to start.
Buying a unit is an affordable alternative to purchasing a starter house. In many cases, it means living a low-maintenance lifestyle in a vibrant, urban neighbourhood—something that suits many young professionals perfectly.
If you’re thinking of buying a unit in the GTA, you can learn more about the process in our millennial condo-buying guide…
Saving for your downpayment
Your downpayment is the money you’ll pay upfront, so it’s important to start saving for it as early as possible. For condos under $500,000, the minimum is 5 per cent of your purchase price. For units that cost more, it’s the same rate for the first $500,000, and 10 per cent for any amount above that. While saving such a substantial sum can be challenging, it’s certainly not impossible.
One of the most useful tools at your disposal is a tax-free savings account (TFSA). Opening one with your bank will allow you to set aside thousands of dollars per year that aren’t taxable, which means you can save faster than you otherwise would. You might also want to consider setting up your finances so that a set amount of money comes out of each paycheque and goes directly into your TSFA.
Pre-construction or resale?
If you’re interested in condo living, you’ve probably heard of pre-construction. Units that haven’t been built yet are a great choice for many millennial buyers, but they’re not right for everyone. Here are a few of the advantages of both pre-construction and resale condos.
Pre-construction
More customization options
You can make a pre-construction unit truly your own by choosing your colours, finishes, and upgrades.
Saving up may be easier
When you buy a pre-construction condo, the deposit structure is more flexible. You pay in installments over a longer period—which means more time to save.
Lock-in pricing
Essentially, buying pre-construction means locking in today’s prices for a unit that won’t be ready right away. While you wait, your condo’s value may rise—making it a great investment.
No wear and tear
You’ll be the first one to live in your pre-construction condo. Everything will be clean, pristine, and brand new.
Resale
Fewer surprises
Buying a condo that already exists allows you to see exactly what you’re purchasing, which many buyers find reassuring.
A neighbourhood you’ll love
Of course, there are many great pre-construction developments in popular neighbourhoods (case in point, Mimico). That said, some of the best buildings are already deeply rooted in the GTA’s most well-established communities.
A solid move-in date
Pre-construction timelines can be long, and they’re sometimes subject to change. With a resale unit, you can set a move-in date with the seller—and stick to it.
The bottom line? There are advantages to both types of condos on the market. An agent with the right expertise can help you weigh the pros and cons and decide what’s right for you.
Creating a budget
Knowing how much you can afford isn’t quite as simple as being aware of average prices in the Toronto market. You should also know how much financing you could qualify for. When you’ve got a reasonable sum in the bank and feel ready to start your search, it’s time to apply to be pre-approved.
During the mortgage pre-approval process, your lender will comb through your financial situation and determine how much financing you’re likely to receive. This amount is a great starting point for your condo search, but your budgeting shouldn’t end there!
When you’re figuring out what you can afford, consider more than just your income, debts, and potential mortgage payments. Delve into your spending habits as well. From groceries to your gym membership, you know better than any lender what you’re likely to spend each month. From there, it’s about figuring out which new costs you’ll be taking on. Here are some of the major ongoing expenses first-time buyers should know about.
Condo maintenance fees
This monthly sum will go towards utilities, maintenance of your building’s common areas, and a reserve fund (which will pay for emergency building repairs).
Property taxes
As a condo owner, you’ll have to pay annual property taxes. The good news is Toronto (and by extension Etobicoke) has some of the lowest rates in the GTA.
Insurance
You’ll receive some insurance through your condo board when you purchase a unit. That said, you may decide to buy more in order to cover things like upgrades to your unit, its contents, and personal liability.
Utilities
In most buildings, some utilities may be covered by your condo fees and others won’t. Make sure you know what’s included for every unit you consider.
Maintenance and repairs
Condo fees will typically cover maintenance and repairs to common areas and the structure of your building. Be aware of which potential issues you’ll be responsible for, and make sure you have the cash to pay for them if need be.
Make a list of must-haves
When it’s finally time to jump into your condo search, be sure you know your must-haves and your dealbreakers. For many millennial buyers, it’s all about convenience.
When it comes to location, do you need to be near public transit? What about buzz-worthy restaurants, shops, and nightlife? How important is it to have a gym or yoga room right downstairs? Then, there’s your unit. What kind of square footage do you actually need? Can you do without a balcony?
If you want top-of-the-line features and amenities along with direct subway access in an in-demand area, expect to pay a premium. That said, prioritizing what you need (and don’t need) can help you find an affordable unit. Working with an agent who knows the city, its developers, and the local market can help you find a condo that aligns with your needs, within your price range.
The right agent makes the difference
From financing to closing, your agent will be your advocate and real estate guide. To ensure the best possible outcome, look for a professional who has condo-buying expertise—and understands the needs and challenges of millennial buyers. With some optimism and the right ongoing advice, you can find and afford a unit that perfectly complements your lifestyle!
Looking for an agent with first-time buyer expertise in Etobicoke? Get in touch! We can discuss what you’re looking for—and how we can help you find it.
