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When looking to purchase a home, whether it’s your first or tenth, the decision to invest in a new or pre-existing build is almost always one of the first questions home buyers face. The idea of buying into the shiny and new is an attractive option, however, higher costs, trends towards smaller floor plans and the risk of shoddy builds quickly make the decision less straightforward. The reality of the situation is that there is no one right answer. There are great upsides and some level of risk with any home you buy but the key is to make sure that you understand all the factors at play, so you feel comfortable with your investment.

Shine vs. Character

The ‘feeling’ you get when you walk into a home plays a huge role in finding ‘the one’ and finding that is unique for everyone. For some, buying new may provide a blank slate with modern vibes that are completely free of that feeling that you are moving into someone else’s home. If this sounds like you, then buying new may be the way to finding your perfect place. This is especially true if you get involved during or before the building process when you have the option to make your own changes. On the other hand, new builds often come at the cost of smaller space and possibly a lack of character. There is no doubt that integrate style into their design plans, but in the end, what they say is true; they just don’t make them like they used to. If, to you, home consists of character through exposed brick, claw foot tubs and large living spaces, then you probably won’t find that ‘it’ factor in a shiny new build.

What Are You Paying For?

Dreaming about what you want in your next home is fun, but as a responsible home buyer, it does come down to what you can afford and how your home can provide you with a financially sustainable future. Because of this, it is important to understand that new builds come at a premium. You are paying for the year it was built so if you are working in a tighter budget, consider if this additional cost is worth increased mortgage payments for the years to come. The cost of buying isn’t the only cost to consider. While new builds can incur higher upfront costs, this may be partly offset by newer appliances and technology that cuts utility costs. Finally, as you have probably heard, location is everything. Newer homes may come along with newer communities/developments. While this may save you money, you might be missing out on more established areas with more amenities and charm. It is important to look at your everyday life to get a good grasp on what you need close to home and what you could stand driving a bit to.

Financing Your Home

Unless a building is already flagged for concerns, getting a mortgage for a new build compared to an existing one is almost identical. The place where people run into problems is when investing in new builds that are not yet ready for move in. A rate hold is offered by lenders to protect home buyers from an increase in rates while they are in the process of finalizing their mortgage. So, if buy a home, you can maintain the rate that was available while you are waiting for your closing date to arrive. In many cases, this is not an issue. However, considering the fact that single family homes typically take 6-12 months to complete and condo buildings can take upwards of 3-4 years, rate protection is not always an option for those longer periods. As a result, while you wait for your brand new home to be built, you may be exposed to rate increases or even new mortgage rules.

Regardless of if you’re buying a rental property or the home you plan to retire in, choosing the right place can be overwhelming. Using licensed and reputable professionals can not only save you money now and in the future, it also gives you the peace of mind that you are making the best decision possible for you and your family.

To Buy New or Not to Buy New?

Your unique situation merits a unique answer. If your mortgage is up for renewal soon, please get in contact with your mortgage broker and begin discussing your options.