Real Estate

Young couple looking for townhouse north of Toronto

  • Last Updated:
  • May 5th, 2017 10:33 am
Newbie
Apr 17, 2013
46 posts
8 upvotes
Toronto

Young couple looking for townhouse north of Toronto

Hi everyone,

We are young professionals and recent grads that are looking to purchase a townhouse in the Aurora/Newmarket area. We are very new to the whole process and would like some help and advice. There are a few starting points to consider:
-We don't have a lot of money saved up for a down payment, approx $50K combined, so i suppose we could put 5% down
-My credit score is not the best (on the lower end) but the girlfriend's credit is great
-We would prefer to purchase a pre-construction as opposed to an already built house

So basically we would like to know the following:
- when registering for a development, what is the minimum cash we need to put in %, and how does it work after that? I heard that you don't need to get a mortgage (which is where your credit score comes in) until the house is built and you are ready to move in.
-Also heard that you don't need both parties' credit score to be tested, just one of the people, and the other person as a co-signor?
-What happens financially while the house is being constructed, and what happens if the development is completed earlier or later than planned?

The reason why we would prefer a reconstruction is to save more while we wait, while in the meantime we would be renting an apartment.

Thanks everyone for any help, and anything counts. Also it would be appreciated to direct us to anywhere we can get more information on the matter (other than mortgage brokers/real estate brokers, as this is already being undertaken).

Thank you,
OP
36 replies
Deal Addict
Oct 29, 2010
4475 posts
811 upvotes
Do you have any projects in mind where the builder told you that he has units available to you?
The pre-construction market is very crazy, people stand in line for days only to find out everything was sold out before the first person in line got inside.
There's probably more inventory for the more expensive units 1.5M+ as the cheap ones go out before they become available. I haven't looked as north as Newmarket but between Brampton on the west and Stouffville on the east and north of the 407, cheapest townhouse pre-construction that I've seen was 1M.

In terms of deposit, you would probably need anywhere between 50k-100k and they would probably spread it across 4-5 payments over the period of construction.
When you go to the builder, they will usually have their own lender that they work with that they will want you to talk to whom is going to pre-approve you or you can talk to your own broker or even your own realtor who is likely to have a way to get you an early pre approval.
In terms of credit, not sure really, they aren't too picky as long as it's alright and you have the income to support the numbers.

What is your budget like? I'd start by signing up to all the projects available on BuzzBuzzHomes, just don't expect units to be available right now, in order to have a chance you need to be ready when they notify you that there is a change in the project (floor plans, prices, dates).
Member
May 5, 2013
311 posts
98 upvotes
flafson wrote:

What is your budget like?
A 50k of downpament which is 5% and finance the rest is hardly a budget, it looks more like a eternal debt to me.
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
You could get townhomes in Milton for around the 550-600k. 3 bed, 2 bath, gets your foot into the market. Unless you must live in aurora, i know it's expensive there, then consider other areas with cheaper townhouses. There is a go line from Milton.
Deal Addict
Jul 29, 2006
4253 posts
1078 upvotes
Continue saving until you have a more sizable downpayment to meet pre construction payments or 20% on resale home. Create a budget, cut unnecessary expenses, move into one of your parents basements for a year or 2.
Deal Addict
Oct 29, 2010
4475 posts
811 upvotes
nx6288 wrote: Continue saving until you have a more sizable downpayment to meet pre construction payments or 20% on resale home. Create a budget, cut unnecessary expenses, move into one of your parents basements for a year or 2.
That's a very unrealistic advice. By the time they have 20% they will only be able to afford a condo.
Banned
Dec 5, 2015
1338 posts
451 upvotes
Thornhill, ON
manne3702 wrote: A 50k of downpament which is 5% and finance the rest is hardly a budget, it looks more like a eternal debt to me.
Not specific to OP ..but in general

What's wrong with that? That's what smart and rich people do...Why would you tie up cash in a property when interest rates are so low

There's nothing wrong with debt..debt is good...it's all just a cashflow exercise that matters

It's like not taking a 0% finance offer for a car when the cash discount is not worth as much (or there's none )as the 0% interest
Deal Addict
Jul 29, 2006
4253 posts
1078 upvotes
flafson wrote: That's a very unrealistic advice. By the time they have 20% they will only be able to afford a condo.
I know...but I really struggle with thinking about what the alternative would be, which is really stretching your financial limits and paying a monthly mortgage insurance.
Deal Addict
Dec 28, 2002
3178 posts
423 upvotes
pre-construction requires 20-25% deposit so you have to find that cash before closing..
Sr. Member
Dec 19, 2010
907 posts
348 upvotes
Toronto, Ontario
kareshi wrote: pre-construction requires 20-25% deposit so you have to find that cash before closing..
where in the world did you get that information from? you do not need 20-25% deposit for pre-construction.
generally speaking, depending on the builder and cost and also if it is a condo but generally it's $30,000-60,000 deposit.
Deal Addict
Nov 13, 2013
4528 posts
3689 upvotes
Ottawa
flafson wrote: That's a very unrealistic advice. By the time they have 20% they will only be able to afford a condo.
Maybe maybe not.
Deal Addict
Sep 3, 2013
1066 posts
394 upvotes
Toronto
If you have $50,000 and ready to put that in as 5% of down payment, you plan on having a $950,000 mortgage? I say, look at your cash flow and see if that is even affordable and realistic for both of you. I'm guessing the latter. You have other expenses too like closing costs, property taxes, utilities.

We purchased a pre-con townhouse in toronto in 2011 and only needed $5,000 to hold it. We needed $25,000 few months later and then whatever upgrades we needed. Ended up putting in about 15% of the value at move-in, a year later. Not sure how it is now although I honestly think you need to rethink your budget and area; you will need to save up more and reconsider buying vs renting for now.
Deal Addict
Mar 14, 2006
2290 posts
2343 upvotes
Toronto
Even in Newmarket or Aurora is getting very expensive. Richmond hill townhomes are asking for $1.1mil and up. Good luck.
Newbie
Apr 17, 2013
46 posts
8 upvotes
Toronto
Kayceern wrote: If you have $50,000 and ready to put that in as 5% of down payment, you plan on having a $950,000 mortgage? I say, look at your cash flow and see if that is even affordable and realistic for both of you. I'm guessing the latter. You have other expenses too like closing costs, property taxes, utilities.

We purchased a pre-con townhouse in toronto in 2011 and only needed $5,000 to hold it. We needed $25,000 few months later and then whatever upgrades we needed. Ended up putting in about 15% of the value at move-in, a year later. Not sure how it is now although I honestly think you need to rethink your budget and area; you will need to save up more and reconsider buying vs renting for now.
We wouldn't be looking at a $1M home. We would like to find a townhome in the 400K-600K range, carrying a 550K mortgage. Thank you for the estimated cash outflow you provided! Would it ever be possible to find a pre-con that would last longer than a year?
Newbie
May 24, 2016
34 posts
4 upvotes
Aurora and Newmarket are not only expensive but extremely competitive. My parents friends wanted to buy into the new townhouse development near Upper Canada Mall, the Saturday VIP release had people lining up from Wednesday night. By Thursday morning they had 75 buyers in line for only 40 townhomes. You may want to look towards the west end for something in your budget, Waterdown, Hamilton, Stoney Creek etc
Deal Fanatic
User avatar
Jan 31, 2006
5020 posts
888 upvotes
Toronto
Do you know how much mortgage you can get first, i think that's the most important question. you might not be able to get a decent mortgage with 5% down.
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Member
Apr 5, 2017
435 posts
63 upvotes
I find it hard to understand why you guys need to buy a place so early, given your financial situation.
Deal Guru
May 1, 2012
10538 posts
11427 upvotes
Toronto
You're gonna have to go pretty far to score a brand new townhouse for 400-600k. I think perhaps Cambridge or Kitchener area.
Member
Feb 20, 2017
337 posts
106 upvotes
Barrie, ON
Just do a quick search on realtor.ca to see townhouse prices, I think the area you're looking in is to expensive, but you haven't listed your combined income. Townhouses in Aurora/Newmarket are typically 700K+, there are some real crappy ones in certain areas but they usually sell quick.

I'd suggest doing some research in the current market if you're that much in a rush.

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