If you have the means to buy a more spacious home, congratulations are in order. There are few things in life as exciting as upgrading your living situation, and home hunting with a sizeable budget can be enjoyable. At the same time, the logistics of completing a home purchase require skill and forethought, and the upsizing process is no different.
If you’re ready to purchase a larger living space, here are five things you’ll want to consider…
1) Decide whether to buy or sell first
Does it make more sense to buy your next home before selling the one you live in now, or vice versa? In a buyer’s market, your property may take longer to sell—and as a result, you could wind up paying two mortgages at once. Under these circumstances, it’s usually a good idea to sell first. In a seller’s market, buying first is a lot less risky (and it could result in a smoother move between properties).
Of course, your goals, preferences, and financial situation should all play a role in your decision. An experienced real estate agent can help you determine which course of action is best for you.
2) Determine how much more space you can afford
To make the smartest purchase possible, it’s important to know exactly how much space you can afford. As a general rule of thumb, your monthly costs (including mortgage payments) shouldn’t rise above 32 per cent of your total income. When you factor in existing debt (credit cards, car loans, etc.), that number shouldn’t exceed 40 per cent.
It’s also essential to think about the ongoing costs of homeownership. If you’re moving from a condo to a house, you’ll be incurring new maintenance costs that your monthly fees used to cover. Even if you already own a single-family home and know what to expect, don’t forget that many of your bills—including utilities—are likely to grow alongside your square footage.
3) Talk to a financial expert
When you’re selling one home and buying another, speaking to a financial expert is crucial. If relevant, they can tell you about bridge financing, which will allow you to use the equity in your existing home to help pay for the next one. If you’re about to take on a new mortgage, you should also explore your financing options. Remember that breaking your existing contract could lead to a hefty penalty, so it’s usually not ideal.
If the rate or conditions you have for your current mortgage are favourable, you may be able to “port” (or transfer) them to the home you’re about to buy. If you’re upsizing, your new property will most likely be more valuable than the one you’re selling. In this case, a financial expert may suggest a blend-and-extend mortgage strategy, whereby your old and new rates are combined.
4) Think about neighbourhoods
Do you know where you can afford a larger property? Given the differences in home prices from one neighbourhood to the next, it’s worth considering. In general, living centrally is going to cost more. Space comes at a premium in the city’s core, where some of Toronto’s most desirable areas are located.
Purchasing in the suburbs is often less expensive, but there are many exceptions. You’ll find a number of exclusive residential communities on the outskirts of the city, and property values may be higher than average in some of these areas. Working with an agent who’s a neighbourhood expert will help you find a home that perfectly matches your needs, lifestyle, and budget.
5) Consider layouts
Last but certainly not least, carefully consider how your family tends to use indoor space. You may require more square footage, but a home’s layout is often just as important. Would a larger, open-concept kitchen make life easier? Perhaps an additional bathroom would be more convenient, or a spare bedroom for that relative who visits often.
If you’re buying a bigger home, make sure that all of your space-related decisions are intentional. With a bit of forethought and some guidance from an agent who understands the upsizing process, your family is sure to find the absolute perfect living space.
Ready to purchase a larger home? Get in touch to learn what’s available on the market today!