Guide to Buying a New Build Home

When you buy a new build house, you become the first owner. And that 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  • No outdated wiring, plumbing and roofing issues.
  • Plus, you get a provincial new home warranty for most major problems you may encounter.

Constructing a house on example

Comparing New Homes to Resales

Is it better to buy a newly built home? Only you can answer that, but picture how different buying a new build home can be compared to purchasing a resale home in Greater Toronto Area. 

  • You get what you see with resale homes — new homes may be under construction.
  • Upgraded homes can be nice too — those shiny new appliances and granite countertops may come at an inflated cost in a new build home. 
  • Landscaping, pools or multi-media rooms are complete – you may have to put off adding expensive extras when you’re buying a new build home.
  • 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.

You don’t have to decide now. Using a buying a new build home checklist from the Canadian Home Builders Association or other developers can help you figure out what’s best for you.

You can even try buying a new build home off plans by Googling the Internet for popular home builders in neighbourhoods you like.

Checking Builder References

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. Ask new home builders for at least three references from customers or interview builders to see if you think their ideas are similar to yours. Building a home is a long journey and you want someone who can go the distance.

Writing the Offer to Purchase

You said it: new home purchase agreements are way more complicated than agreements of purchase and sale for resale homes. Before you sign, make an appointment with an Axess Law Greater Toronto flat fee lawyer. 

We answer any questions you may have. We review your 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.

If you want changes, we prepare revisions to make the contract legally binding on the contractor or developer and ensure you are not being pressured to sign. Builders who are reluctant to work with buyers to deliver the product they want may not be right for you.

Offering an example property

Your New Home Warranty

New homes are covered for major structural deficiencies and unreasonable delays by the Ontario New Home Warranties Plan. 

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.

Depending on the problem, your warranty covers your home for 1, 2 or 7 years. Not all defects are covered, so read your warranty carefully before contacting Tarion.

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.

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. 

Budgeting for expenses and taxes in getting a property

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.

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 builds 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 Lawyer

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. 

We go over any concerns you have, like do you lose your deposit if the finances fall through and what is title insurance.  You receive a final statement of adjustments showing your costs to purchase the home and pay expenses like legal fees.

Flat Fee Legal Services — Savings You Can Appreciate

Axess Law offers affordable real estate lawyer flat fees. Find cheap lawyers (Toronto and area) for just $999.99 and up to buy a home or condo. Selling a home? Our low cost lawyer fees start at $799.99 and up. 

We arrange online real estate lawyer video calls anywhere you are or you can meet with us in person at any Axess Law office. We have free parking, are close to transit and make day or evening appointments — whatever fits your schedule.

Book an Appointment Online or By Phone Today

Dial 1-647-479-0118 for a free quote on buying a new build home or make Axess online appointments. It just takes minutes of your time. Pop in to our convenient Greater Toronto Area law offices to make an appointment today. Our real estate law downtown Toronto offices have day or evening openings to suit your schedule. Toll free calls accepted at 1-877-402-4207.

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