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Can mortgage cover pre-construction fees?

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As the price of resalable condos are inching up higher day by day, prospective buyers are tilting to pre construction condos. Pre construction projects are based on floor plans; the actual construction is yet to begin. Resalable condos are habitable, finished, occupied, rented apartments that can be transferred to someone. The fee structure of ore construction condos is a bit intricate, as the project is in progress. 

Advice from a reputed real estate broker can add significant value to your investment. Triplex for sale is a golden investment opportunity; as you own the property, you can earn passive revenue from it. As a triplex have three floors, you can rent two floors while you stay in one. This regular flow of cash helps you to pay the due amount of pre construction costs. Real-estate investment is relatively safe compared to equity, debentures, and futures, as these financial tools are volatile, subject to global news and socio-political developments. Pre-construction condos are most lucrative within the real estate domain, as you make the least down payment and can enjoy significant price appreciation after the project is completed.

Construction mortgage

A construction mortgage is a kind of mortgage used to finance the building process of a condo. The advantage is you have to pay the interest part, not the principal, while the process is in progress. Once the building is completed, the construction mortgage becomes a standard one. The money is borrowed in multiple phases as construction progress. This type of financing option has two parts; a loan to finance the construction process and a mortgage on the finished unit. The aspirant need not apply twice; you will have one final loan. Deduction on mortgage interest cannot be claimed, as the condo is under construction; the applicant can only claim it after the apartment is ready to occupy. 

HST

Pre construction condos are subjected to HST (Harmonized Sales Tax).HST is a single value added sales tax comprising federal goods, services tax (GST), and provincial sales tax (PST). The developer usually includes HST in the final price of the unit, which you pay. But resalable condos are not subjected to HST. If the buyer intends to buy the unit for a personal residence, he is permitted a rebate. Most builders assume this factor, reflecting this rebate in the offered price to buyers. If you rent out the condo for at least a year, you can avail of another refund, subjected you provide adequate rent receipts. 

 

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