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Buying a new or existing home: Which is right for you?

Last updated on October 12, 2023

When buying a home, a lot of questions come up. Some, such as what kind of exterior siding you prefer, aren't as important. Others, such as where and when you buy, have more of an impact. Whether to invest in a newly built or previously owned home is one such question, and each choice has its own pros and cons.

New or previously owned? When it's time to buy, this is a question that comes up.


What are your needs?

When deciding to buy a new or previously owned home, the first step is to make a list of your needs. Among the things to consider when purchasing are:

The type of property: such as income, single-family, condo or commercial.

The size of the property: such as the number of rooms and bathrooms and if there's a garage.

Location: such as the kind of neighbourhood you want to live in and how close you are to services and public transit.

Your budget: such as your revenues, spendings, debts, the down payment, purchase price, start-up costs, notary fees and transfer tax.

From there, you'll be able to analyze the pros and cons of new builds in relation to the properties that have been occupied.

Make your budget with the Desjardins online tool

New home: Peace of mind

Buying a new home means it's move-in ready. It's a blank slate for new stories, new memories. It also means you're the first to own it—though you're probably not the last! Let's talk about the pros and cons that come with a new home.

Search for a new home

Pros of buying a new home

A new home comes with fewer surprises. You know the exact plans and which materials were used. Beyond this, buying new has many other advantages. Here are a few:

1) Quality and condition of the property

First off, with a new build, maintenance costs are lower, and you usually don't need to worry about major renovations for at least a few years. Structural damage risks are also less of a worry, since these often arise from wear and tear. Essentially, the chance of finding hidden surprises or major issues is lower when you buy a new home. Plus, you don't have to worry about a legal warranty with the previous owners if any problems arise.

In other words, there's generally less work to do in the short term, though it depends on your contract. Will the basement need to be finished? Will you need to build a patio? Otherwise, building defects are covered for the first 5 years by the builder through the Guarantee Plan for New Residential Buildings. You'll have real peace of mind.

What is the Guarantee Plan for New Residential Buildings?

Enacted in 1999, this plan mandates Garantie de construction résidentielle (GCR) to ensure that contractors properly perform their legal and contractual obligations under the Regulation respecting the guarantee plan for new residential buildings. If you acquire a new home or condo covered by this plan (houses, duplexes to quintuplexes, and multi-family buildings with no more than 4 stacked private units), you'll automatically benefit from it. The contractor must provide a signed copy detailing the coverage, claim procedure and options for recourse.

Contractor looking over plans for new build

This is why it's essential to learn about the builder's and promoter's past projects and their rating (Cote Qualité GCR) to get an idea of the quality of their homes. If a builder has an A rating, it means that there were no issues found in the work they performed. Take the time to research this and fully understand your contract. It'll increase the chances that your real estate project will be a success.

2) Personalization

If construction isn't complete, you might be able to choose finishes like materials, colours and other characteristics. There are all kinds of options out there to personalize your home's style and design from the get-go!

These include:

  • The floor
  • Bathroom furnishings
  • Kitchen cabinets and backsplash
  • Exterior siding
  • Faucets and showerheads
  • Etc.
Person picking ceramic tiles for their new house

Often the exterior has yet to be done, so you can transform it to fit your needs.

However, remember: If the choice of materials and their level of quality aren't included in the base price of the home, they're additional costs. Be careful, because these can add up fast!

3) Saving energy and money

Despite the popular belief, buying a new home isn't necessarily as expensive as buying an existing one. This is because you save money on short-term renovations and take advantage of different tax credits and programs, as well as more energy-efficient building standards.

Different government programs are in place to support aspiring new-build homeowners, alongside the existing subsidies and tax credits. For example, the GST and QST rebate for owners of new or substantially renovated housing can provide a maximum tax rebate of 36% of the GST and 50% of the QST paid, up to $6,300 and $9,975, respectively. To learn more, talk to your accountant.

Take advantage of the programs

Energy-efficient building standards and modern technology can help you save energy, and thus, money. New residential buildings are more environmentally friendly and make better use of natural resources to optimize energy consumption. They often feature more efficient thermal insulation and more durable materials. Not to mention that new houses are less likely to have harmful materials, like asbestos or neoprene. That means they're safer for your health, too!

These factors can all have a positive impact on the property's resale value.

Cons of buying a new home

Of course, nothing's perfect, and sometimes buying a new home can come with its own issues. It's important to know both sides before you take the plunge!

1) Cost and taxes

A new build is usually listed at a higher price than an existing home. There's a chance of extras and cost overruns as well, especially when it comes to finishes chosen, improvements, landscaping, basement, changes to the plan, addition of fencing and purchase of various appliances. Moreover, you might need to factor in municipal hook-up costs to the equation. New properties also leave very little room to negotiate.

New condos: A potential exception to the rule!

Sometimes, you might be able to snag a condo in a large building for under the asking price. If there are only a few units left to sell and the developer is in a hurry to move on with their next project, they might be tempted to let it go for smaller profit.

Unlike used properties, new builds are subject to GST and QST, so be prepared to tack on the taxes to the final price!

New condo buildings

2) Time to invest

To find the right project, the right contractor, the right professionals and the right materials, it takes hours of research, calling around and administrative legwork. In addition, if you buy a property before or during construction, you'll certainly be spending time at the construction site to track the progress.

You'll therefore need to account for how long it will be before your home is ready for you to move in. Unfortunately, it's possible that, for a number of reasons, the project won't be completed on time! That's why it's important to check the builder's previous projects and overall reliability, as well as what guarantees they offer.

3) Neighbourhood and character

New development sometimes means ongoing construction. Even if construction on your own house has been completed, this might not be the case for others. This means putting up with more dust, noise and activity than you would in an already established residential neighbourhood.

What's more, neighbourhoods full of new homes are sometimes criticized for lacking character. There generally won't be much greenery (at least not yet), and it might not feel as warm and vibrant. Sometimes, services aren't available yet. The school may still need to be built, and water may still need to be connected, for example.

Neighbourhood of new houses under construction

Previously owned home: Character and charm

When you buy residential property, you can opt for an existing, previously owned home. It may have had one or more occupants over the years, and the purchase will be between you and the current owner, rather than with a promoter or builder.

Search for a previously owned home

Let's look at the pros and cons of buying a previously owned home.

Pros of buying a previously owned home

In some ways, buying a previously owned home is the opposite of buying a new one. It's precisely in the drawbacks of a new build where an older home shines.

1) Price and negotiation

An existing home is usually more affordable than a new one. This is perfectly normal. It's been lived in and is set up for someone else's taste. Unlike a new build, there's no reason to expect extras or cost overruns. In addition, since your negotiations with the seller are ongoing, you have more opportunity to offer a price lower than the asking than you would for a new home. Lastly, unlike new builds, previously owned houses are generally tax-exempt!

Pay attention to real estate market trends!

The resale market is subject to different fluctuations. Depending on trends, the price of an old home can be higher or lower. If it's a seller's market, you could even end up overbidding and pay more for and old home than a new one.

In terms of resale, an older home might fetch you a better return on investment if you do some renovations over time. Since a new home is already more up to date, it's harder to increase its value. On the other hand, there's a lot more you can do with an older home to increase its value—as long as you don't go overboard. 

2) Neighbourhood and character

Character is one of the most popular arguments for buying a previously owned home. If a house has been lived in for years, it often brings its own sort of personality.

In neighbourhoods with older homes, you might find more historic charm, lush vegetation and tall, mature trees. Indeed, these areas are less likely to be heat islands. These neighbourhoods are often well established and generally have fully developed infrastructure, with schools and parks nearby.

Row of homes with mature trees in front

3) Taking possession

With a previously owned home, you can move in quickly, since the date of possession set out in the offer to purchase is fixed. There's little risk of delay, since the vagaries of construction are not a factor.

However, the move-in date can still vary. If you just need to repaint, you can move in right away. If you're doing major renovations, like changing the floorplan, the delay might be longer. It all depends on the property's condition and your own needs.

Cons of buying a previously owned home

As you can imagine, buying an existing home comes with drawbacks too. These include:

1) Style and condition of the home

Buying a previously owned home means living with the choices of former owners. While you might like some of these choices, you're bound to find some you don't, whether for aesthetic or practical reasons. This means you'll have to make compromises or spend money on redesigning or renovating.

Find trusted contractors for your renovations

It's important to have a detailed inspection done of the home so you can truly know what state it's in. The foundation, roof, plumbing, windows and electricity all need to be checked. Compared to a new home, your chance of finding latent defects is higher. With a thorough inspection, you can get an idea at what you'll need to fix in the short term and factor it into your budget.

Roof inspection

On top of that, a previously owned home can be a source of significant energy loss, which will net you higher electric bills. Older insulation is less effective than today's, which is built to the latest standards using modern technology.

2) Property maintenance

Unlike new builds, which typically don't require major work for about a decade, most previously owned homes will require some in the shorter term. Of course, this depends on the quality of the renovations and maintenance already done.

That's why you need to prepare a budget based on the age and condition of the property. If the previous owners were negligent, be prepared for high maintenance costs. That said, there's almost always something that can be done, whether it's caulking windows, renovating the kitchen or redoing the roof.

It also helps if you have a log of previous work that's been done on your home, including the date and details. However, it's often difficult to know everything that's been done.

Get some tips from Desjardins to you plan, finance and complete your renovations.

New or previously owned: Make the right choice for you

Personal taste aside, there are both positives and negatives when choosing to buy a new or previously owned home. One's strength is often the other's weakness:

Existing vs new - comparison of benefits and disadvantages

Generally speaking, if you're willing to invest time in a property to modernize it, you should purchase an existing home. If you're looking for a turnkey, you might want to buy new, even if the initial price is higher.

At the end of the day, buying a home is an important decision, and you'll want to think long and hard about it. What's most important is that the home speaks to you—if not because of the character and charm you can see, because of what you can envision for the future. That, and knowing what might await you before you make a decision!

Let Desjardins guide you to make your home buying a success. 

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