When buying a brand new condominium from the builder in Toronto, you automatically get a 10-day cooling period
Note: You do not have a 10-day cooling period if you buy a re-sale home.
Before you buy a pre-construction condo in Toronto:
If you are thinking of purchasing a new condominium, you need to shop for a real estate lawyer and a mortgage specialist before signing the contracts.
Lawyers are usually busy. Make sure they are aware of your upcoming purchase. You might also want to ask them how much they charge for a review of the document without closing the property and the fees for reviewing the document and closing the property. Fees for condo document reviews are typically included in one price and is billed at closing. However, if you cancel the agreement, then the lawyer will charge you for their time reviewing the documents.
Contacting a mortgage specialist before you purchase a condo is also something I would recommend. You need to find out how much money you can borrow. This will allow you to choose the unit within your budget. You do not want to fall in love with a particular unit only to find out that you cannot afford it.
Here are things you need to do during the 10-day cooling period.
Once you get the signed contract, give your lawyer a heads up and tell them you will be dropping by their office to drop off the documents that same day or first thing the next morning. This will give the lawyer plenty of time during the 10-day cooling period to review the documents and explain them to you in more detail. Do not wait for the 9th day of your cooling period to drop it off to the lawyer. It will not give the lawyer enough time to do anything with that contract. Make sure you ask your lawyer to request a cap (upper limit) on the (development levies) closing cost and perhaps request for the assignment clause to be added. Both capped development levies and assignment clauses are requested to be included in your Agreement of Purchase and Sale (ASP) when buying with us during a VIP Sales event.
A mortgage specialist will also provide a capped rate for your pre-approved mortgage. This capped rate will be the upper limit of what you are going to pay if the interest rates keep on going up. However, if the interest rate at the time of closing is lower than the capped rate, your mortgage specialist will give you that better rate. By the way, you are not committed to this pre-approved mortgage at this time. This means that you can shop around for a better rate with any lender before closing.
If you are purchasing a pre-construction condo, most lenders cannot cap the rate for more than 24 months (developer’s mortgage). See if the builder has an on-site mortgage specialist. They typically can cap the interest rates for a longer period. Otherwise, you just need to renegotiate and renew the pre-approved mortgage once it expires.
If you are looking to sell the condominium within months of its closing, ask your mortgage specialist for an investor’s mortgage. These are typically open variable mortgages. This minimizes the penalty associated with breaking the mortgage early. Make sure you tell your mortgage specialist your plans with the property. That way the can advise you with the right mortgage solution.
In case you get you change your mind:
- The 10-day cooling period allows you to cancel (rescind) your agreement and you are released from any further obligations and all your deposits are returned.
- The day you sign the agreement is day 1 (of the 10 days), regardless of the time of day you signed.
- Weekends and holidays count in the 10 days.
- To cancel and receive your deposits, you have to return the signed contract and condo documents.
- You do not need to provide a reason why you are cancelling.
It’s a busy 10 days for sure! Do a little planning and it will go a lot smoother. Feel free to contact us you have any further questions.
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