How Long Will It Take to Save For a Condo?

As the cost of housing increases both locally and across the country, it’s no secret that saving up for a home looks a little different for today’s generation of buyers compared to years past. 

Despite these new challenges, condos remain a great way to break into the housing market. As they come at a lower price point, purchasing a condo is a great way to begin building personal wealth through owning real estate. 

That being said, just like a house, saving up to buy a condo will require planning and discipline. As you begin saving, you’ll want to be prepared for the various costs involved – not just the cost of the unit. 

In this post, we’ll look at the complete cost of condo ownership and share some helpful tips for reaching your goals sooner rather than later. 

Looking for advice on how to budget for a larger detached family home? We have tips on that too! Click here. 

Down Payment Basics

When you purchase a condo, the down payment is hands down your largest cost. In the past, buyers typically needed a minimum down payment of 20% to purchase a home. However, today’s buyers are facing wildly different conditions compared to years past, and rules around home financing have changed to reflect this.

Depending on your financial strength, you may be able to purchase a home with a down payment of as little as 5%. However, in these cases, you will be required to obtain mortgage insurance – which comes at an extra cost. 

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Need more information about buying a condo in the Greater Toronto Area? Check out these blog posts for helpful tips and insights.

• What Happens if My Pre-Construction Condo is Delayed?
• An Investor’s Guide to Pre-Construction Condos
• How a Real Estate Agent Can Help You Buy the Perfect Condo

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Budgeting For Condo Fees

In addition to the down payment, buying a condo also involves a few specialized expenses. Arguably the most significant of these is your condo fees. 

The fees are separate from your monthly mortgage payments and they cover a number of essential expenses related to the maintenance of the building itself and other similar costs.

As a recurring expense, condo fees can add up in a hurry so it’s important to be adequately prepared for them. Once you have an idea of what you’re looking for in a condo, begin browsing local listings. In most cases, a unit’s condo fees will be outlined in the actual listing itself.

The average price of units you’re interested in, along with their respective condo fees, can help you estimate how much you’ll need to save in order to be ready for the market.

Condo Closing Costs

Like other types of real estate, condos are subject to Land Transfer Tax when purchased. In Ontario, this cost is applied to properties using a sliding scale (between 0.5 and 2.5 percent). However, some municipalities may apply additional taxation depending on the jurisdiction. If you’re uncertain about how Land Transfer Taxes may impact your budget, ask a real estate agent. 

If you’re serious about buying a particular condo, you’ll also need to obtain and review a copy of the status certificate. This comes at a fee too, however, it’s usually quite minimal (less than $100). 

Keep in mind, these costs apply to resale condos. Pre-construction condos, which similarly make for a great pathway to homeownership can come with their own unique closing costs and fees.  

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Buying a piece of real estate for the very first time? Check out these other blog posts to get a sense of what you can expect from the process. 

• 5 Reasons to Get Pre-Approved For a Mortgage Before Heading to the Market
• Essential Tips for First-Time Home Buyers
• 5 Mistakes First-Time Home Buyers Make

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Saving & Building Your Budget

With a complete idea of how much you will need to buy a condo, it’s time to start saving up! You may have already started to set some money aside, however, it can be helpful to create a more regimented savings plan to ensure you reach your goals in a timely manner.  

There are even government programs and initiatives that can help you save for a condo faster. The recently launched First Home Savings Account allows you to have a dedicated space to build up your savings tax-free.

First-time buyers should also take advantage of the First-Time Home Buyer Incentive, which is designed to reduce monthly mortgage costs and help alleviate some of the financial burdens associated with today’s housing costs. 

Want to make the most of your first home? Work with the #1 real estate team in Vaughan! Call 416-571-2724 or send an email to info@arciteam.com today.