Buying a condo is a great way to begin your property ownership journey.
Deciding to purchase a condo may be one of the biggest financial commitments you will make in your life so you will want to make sure you do your research before purchasing to make sure you make a sound investment that you will be happy with for many years to come. Continue reading below to learn what to consider when thinking of buying a condo.
What is a Condo?
A condominium (condo) is a privately-owned single unit, within a larger group of other units. There can be many units in a high-rise building, or it can be found in a smaller building amongst only a few other units. Buying a condo means you own your individual unit and share common areas of the building. This includes amenities like parks, gyms, pools, and other public spaces shared with your neighbours. These areas of the condo are owned by a condo association. Some condo associations require additional fees from condo owners to cover maintenance expenses. Condo owners may also pay property taxes, utilities, and upkeep or maintenance charges.
What to Consider When Deciding to Purchase a Condo
Owning a Condo vs. Owning a House
There will be several factors to consider when deciding if you would like to purchase a house or a condo. The cost is one of the biggest things to consider. An average condo in Ontario is $710,087 while an average house in Ontario is $1,052,920. However, you may be required to put down a larger down payment for a condo and have a higher interest rate on your mortgage than on a mortgage for a house.
Access to Land and Outdoor Space
Prospective condo owners will want to consider the amount of land and outdoor space that is important to them. Condos are often more affordable because owners are purchasing less property and space. This also means you will have less property to maintain, so you will not have to keep up with back or front yard maintenance, raking leaves, cleaning gutters, etc.
Privacy Vs. Socialization
Your desire for amenities and desire for socialization vs. privacy will be additional factors to consider when thinking of purchasing a condo. Condos are often located in urban areas, giving condo owners easy access to amenities and increased chances of socializing and meeting new people. Condo owners also have access to shared amenities like pools, gymnasiums, tennis and squash courts, barbecue spaces, roof-top areas, parks, gardens, and meeting and party rooms where they are likely to interact with other condo owners in the building.
The location of your condo will likely be one of the most important factors when deciding to purchase. Be sure to check any future city development plans for the neighbourhood as some condos may be sold at a great price because the buyers are unaware their perfect view will soon be taken away by. You should also ensure your proximity to quality schools if you are planning to raise a family or other locations of interest. This may include malls, grocery stores, parks, or local waterfronts. Purchasing a condo is much more permanent than renting so choosing a location that you like is very important!
The Price Associated with Condo Amenities
You may have a long list of amenities you’d like to see in your condo’s building, but these extra perks can also drive up the price of your condo. Try to be realistic with which amenities you will actually use frequently, and which ones are the most important for you to have within your building. Before buying, you will want to research what your property tax, utilities, and condo fees will cost.
The Condo Association’s Rules
Buying a condo may not afford you the same freedom as owning a home. There may be restrictions on the types of pets you can have, the renovations you are allowed to make to your condo, or your ability to rent out your condo. Make sure to speak with the condo association about the rules before committing to a purchase.
This factor may not have crossed your mind yet but it is in your best interest to know which direction your windows face so you can predict how much sunlight you will be getting inside your condo or on your balcony. Sunlight isn’t just a preference for most people, it also helps to reduce hydro costs by reducing your need for heat or lights. Different directions will have a different amount of exposure. Eastern facing windows will have the most direct sunlight, which could also become too much sun and will have a negative financial impact in the summer by increasing your need to turn on the air conditioning. A northern exposure will have less sunlight exposure. The most commonly preferred direction is southwestern as it gives you a great mix of sunlight without direct heat in the summer.
The Age of the Condo
A new condo doesn’t always mean it is better, but age is still something to consider. Older condos may have higher maintenance fees but may be worth it if they have a lower purchase price. You may also find reselling an older condo more difficult, so be sure to factor the age into your purchase decision.
The Size of the Condo
You will want to inquire about the square footage of the condo you are interested in buying and determine if it has enough space for you to live comfortably and accommodate your desired style of furniture, electronics, and accessories.
This is a small detail that most people may forget to consider. Some condos have free guest parking or paid guest parking. If you are expecting frequent visitors, this can be an important factor. Be sure to keep your needs, wants, and lifestyle in mind when evaluating a condo
The Floor Your Condo is On
If the condo you are interested in buying is on a high floor in the building, you will likely have a better view and less noise from the street. That will often be factored into the price you will pay for the condo. If you are interested in potentially renovating the condo, it is important to note that some contractors charge more if the condo is on a high floor. Some condo associations may also have higher fees for those living on higher floors.
The Importance of Condo Insurance
Once you have decided to purchase a condo, you will want to reach out to your Ontario insurance broker to inquire about obtaining insurance for your condo. Many people assume that insurance for their condo is covered under their monthly or yearly fees, however, this insurance, which the condo association has, only covers common areas in the building, not the owner’s personal units.
Although condo insurance is not mandatory by law, many condo associations will require it. Most banks and mortgage lenders will also require condo insurance before releasing the funds for the mortgage. Condo insurance not only provides coverage to your condo and contents for fire, theft, and other hazards, but it also covers personal liability, including if someone is injured on your property or if you cause damage to someone else’s property.
We recommend that you take inventory of everything in your condo and calculate how much it would cost to replace everything. Be sure to keep any pictures, mementos, or important items in a fire safe to help prevent damage or loss.
Every condo owner’s situation will be different which may require different insurance add-ons and coverages. Small details about your condo such as the floor it is on or if there is a storage locker will help to determine whether you need additional coverage on your policy.
Find out which coverage options are best for you by contacting your Ontario Youngs insurance broker. We can assist you with customizing your policy to cover the things that are most important to you. We will take the time to explain what your policy covers and help provide the protection that is right for you.
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Disclaimer: The information provided on this blog is for educational purposes only and is not intended as professional insurance advice. The coverage, terms, and conditions of each insurance policy are unique and subject to individual circumstances. The information provided does not guarantee the availability or suitability of any insurance policy for your specific needs. You should not rely on the information in the blog as an alternative to professional advice from your insurance broker or insurance company. If you have any specific questions about any insurance matter, please consult a licensed insurance broker for personalized advice and guidance.