Buying a new build home has a lot of advantages.
- No one has lived in the home before you.
- Finishes, appliances, and vanities are brand new.
- Your home uses the latest, most energy efficient building practices.
- No outdated wiring, plumbing, or roofing issues.
- Plus, you get a provincial new home warranty for most major problems you may encounter.
Buying a New Build Home vs Resale
Only you can answer if buying a new build home is the best choice for you. Picture it this way:
- You get what you see with a resale home — buying a new build home allows you to customize the design.
- Upgraded homes can be nice too — those shiny new appliances and granite countertops may come at an inflated cost when you’re buying a new build home.
- Landscaping, pools, or multi-media rooms are complete in a resale home – you may have to put off adding expensive extras in a new home. What’s involved in buying a new build home in Ontario.
- No GST/HST is owed for resale homes — some exceptions apply, such as if a resale home has been substantially renovated.
- Major expenses like upgrading windows may already be done — unlike buying a new build home, where upgrades have to be budgeted for in future.
How Buying a New Build Home Works
You don’t have to decide now. But if buying a new build home is for you, try Googling the Internet for popular home builders in neighbourhoods you like. The Canadian Home Builders Association or a visit to a show home can help you figure out your options.
You check CarFax or cruise the Internet when you buy a new car. Being just as picky can get you the home you want from a reputable home builder. Asking the right questions before you buy a home.
Ask new home builders for at least three references from customers or interview builders (using an interview worksheet) to see if their ideas are similar to yours. Building a home is a long journey and you want someone who can go the distance. What happens if a contractor gets hurt on my property?
What Your New Build Home Will Cost
Buying a new build home in Ontario typically costs between $200 to $400 per square foot (0.09 of a metre) in 2023. Remember to factor in the lot, building and material costs, labour expenses, contractor insurance, and fees for local building and development charges and taxes. See what a typical build in the GTA includes.
That compares to an average of $812,338 to buy a resale home in Ontario in January 2023. Prices fluctuated from $606,000 in Ottawa to $1.05 million in the Greater Toronto Area. Take into account that Ontario home prices dropped by around 12% between 2022 and 2023.
Budgeting for Extra Charges
Buying a new build home comes with extra charges. While your sales price is adjusted before you take possession, you could pay thousands more than you expected for:
- Ontario New Home Warranty enrolment fees, between $300 and $1,745
- NRST – non-resident speculation tax
- HST, included in the purchase price or paid separately – some rebates apply
- utility hookups for gas or water
- carbon monoxide and smoke detectors
- sewer impost and super mailbox levies
- smart hydro meters
- PST on appliances
- legal fees to discharge builders’ mortgages on your home and lot
- bonding fees or insurance to protect your purchase deposit
- landscaping, paving and grading
- and incidentals like fencing.
Not only that, but local development or education levies may increase while your home is being built. Builders pass those higher rates on to you. Your mortgage lender will expect you to pay these extra charges on your own.
What’s in Your New Home Warranty
New homes are covered for major structural deficiencies and unreasonable delays by the Ontario New Home Warranties Plan.
Depending on the problem, your warranty covers your home for 1, 2, or 7 years. Not all defects are covered and renos can void your warranty, so read it carefully before contacting Tarion. What voids Tarion warranty coverage.
If your home has foundation problems or needs repairs the builder has failed to make, Tarion may intervene on your behalf or pay for someone else to fix your home. You could be compensated for delays in moving into your home if they exceed 240 days or if the builder is unable or willing to finish the home, your warranty may pay to remedy the problem. What to do if a builder delays construction.
Protecting Your Purchase Deposit
Tarion can also protect your purchase deposit for:
- up to $60,000 on homes priced at $600,000 or less
- 10% of the purchase price up to $100,000 for higher priced homes
- or $20,000 for condos.
Your contract is not automatically cancelled if delays occur. Like any contract, you are required to honour the terms. But Tarion can advise or assist you if needed. And if the delays exceed 365 days, depending on the circumstances, you may be able to give 30 days notice and walk away.
FAQs About Buying a New Build Home
Is it harder to get a mortgage on a new build?
Not necessarily. Like most mortgages, a down payment is required. For owner builders, that can be sweat equity you put into building your home. If you hire a contractor, budget 5% to 20% of the land and construction costs for the down payment. The maximum you can borrow depends on your debts compared to income from salaries, self-employment, investments, or other sources. To find the approximate maximum, subtract your monthly debts from income and divide by half. Hiring a mortgage lawyer.
Can you negotiate on a new build?
Prices can be non-negotiable, but you often have a choice of exterior and interior finishes, cabinet designs, or paint colours without incurring extra costs. Custom builders will construct whatever you desire, as long as:
- you pay the difference for custom upgrades
- the design satisfies local zoning and bylaw rules
- and your plan meets provincial building and fire codes.
Do new build homes go up in value?
New build homes appreciate well, and can be better long-term value than resale homes. They may take longer to resell because of their higher upfront costs. But with Ontario homes appreciating an average of 14% yearly, and more in hot markets, buying a new build home can be a wise investment.
Why You Need a Real Estate Lawyer
New home purchase agreements can be complicated. Before you sign, make an appointment with an Axess Law real estate lawyer. Drafting new build agreements of purchase and sale.
We review your new home purchase agreement to find the finer points you may miss. Our licensed real estate professionals ensure you understand and agree with the contract before you make one of the largest purchases of your life. Your real estate lawyer answers any questions you may have, like do you lose your deposit if the finances fall through and what is title insurance?
If you want changes, Axess Law prepares revisions that make the contract legally binding on the contractor or developer while ensuring you are not being pressured to sign. You receive a final statement of adjustments showing your costs to purchase the home and pay expenses like legal fees.
Your real estate lawyer can do document searches, find property surveys and register new homes with local land registry offices. We execute your mortgage discharge (Ontario buyers or sellers) and arrange signatures for mortgage insurance and other documents for banks and mortgage lenders. A fire insurance binder is mandatory if you are financing your home.
Affordable Legal Services, Anywhere in Ontario
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or refinance property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
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Book an Appointment Online or By Phone Today
Dial 647-479-0118 in Greater Toronto Area (toll free to 1-877-402-4207) for a free quote on legal fees for buying a new build home. Pop in to our convenient Greater Toronto Area or Ottawa law offices to make an appointment today. We have flexible in-person appointments or you can connect by secure video conference call anywhere in Ontario.
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