Buying a condo - for dummies
Buying a condo is very different than buying a conventional dwelling, with different factors to consider when comparing properties and different boxes to tick when it comes to getting a mortgage. While there's no single way to buy a condo, there are some standard processes and well-tested guidelines that can help you along the way. Before you start looking into mortgages or hunting for a condo, it's important to understand the basics in order to make sure you're making the right decision.
What is a condo?
The most important thing to remember is that a condo is not a house. While this might sound obvious, people often fail to understand the ownership arrangement that defines a condo purchase. Unlike a house, purchasing a condo gives you no ownership over the exterior of the building, no ownership of the surrounding land, and the right to use the common areas and assets of the community.
While you have to pay for these common assets through monthly condo fees, the condo lifestyle is attractive because it allows you to reduce time spend on maintenance and upgrade your quality of life.
Contrary to popular opinion, a condo is not defined by the construction style of the dwelling. While the vast majority of condos are apartments in inner-city locations, they can also be townhouses, semi-detached units, or even fully detached houses.
Rural condos and retirement communities are more likely to offer gardens and access to communal land. Other than the ownership arrangement that's in place, condos are also defined by the existence of shared amenities and common areas.
How condos differ from each other
Whether it's a pool or an outdoor entertainment area, condo communities often cater to specific demographics based on their location and the type of amenities they offer. For example, certain inner-city neighbourhoods are likely to attract young professionals, with other areas likely to attract young families, downsizers, or older retirees.
Where you want to live will have a huge influence on your lifestyle, so look into specific neighbourhoods and try to find a condo community that's a good fit for your budget and lifestyle needs.
Getting a mortgage for a condo
For the vast majority of people, buying a condo means getting a mortgage. While the actual process is fairly standard, you need to ensure that your finances are healthy before approaching lenders. While you will need a 20 percent deposit to access a standard conventional loan, non-conventional loans may be an option for as little as 3.5-10 percent of the purchase price. Government insured loans and other non-conventional loans often come with higher interest rates and tighter restrictions, however, so do your homework before you sign any contract.
When you're looking into mortgages, it's also important to understand the different types of lenders and home loans available. From variable vs fixed interest rates and open vs closed mortgages through to banks, mortgage brokers, and mortgage terms, it's important to understand your financial options before you start hunting for a condo.
Condo projects may also come with restrictions when it comes to government-insured loans, so speak with your lender and find a solution that works with your budget and down payment limits.