This vs That 4 Improve or Move

Michael Hallett • Jun 28, 2016
This is the great debate around many household dinner tables nowadays: improve or move? With all the attention the real estate market is getting these days in the local and national media, I'm surprised everybody isn't cashing in, selling and moving. Everybody who owns real estate is holding their very own lottery ticket, each with a slightly different purse.

Sell your home for lots of cash and buy new...what could be easier! There is definitely something to be said about buying new and 'shiny' with a warranty. It's glamorous, it's easy and it makes for great Facebook posts.

Heck, on the flipside, posting before-and-after pictures of a renovation could be more impactful. You could even use the platform as a confirmation tool with picking wall colors, countertop material or even layout.

You don't have to sell to win the lottery. The equity in your home could also be viewed as the lottery proceeds. In my opinion is there isn't enough thought put into staying in the current home and improving the living space. Bear in mind, there are valid reasons why you have lived there so long: an established network of friends, close to school, convenience for day-to-day amenities, access to work, beautiful big back yard (new homes have small yards nowadays), family activities, kids' sporting programs...the reasons are endless to stay...Bu-u-u-ut one could say there are many reasons for moving too.

My only intention for this blog post is to create questions and have you think, is improving or moving the best option? Don't always jump at the dangling carrot; there could be other options.

One could argue that deciding to sell and move is the easier of the two. All that you need to do is to call your trusted Realtor and suddenly within 4 to 9 days your home is sold. But is that the more financially sound choice?

Here are the costs to consider when selling your home.

  • Approx Realtor fees: 3.50% on the 1st $100K, 1.15% on the balance
  • Potential mortgage penalty: Based on the balance, or it can be ported
  • Lawyer fees: $2,000 (sell and buy)
  • Property repairs: TBD; major repairs or just minor touch ups?
  • Movers: Professional movers $2,500 or friends/family
  • Inspection: $400-500 buying new property
  • Appraisal: $300 buying new property with 20% down or more
  • Property Transfer Tax: 1% on the first $200K & 2% on the remaining bal. (purchase)
  • Mortgage payment: Difference between mortgage payments (old and new) is a cost
  • GST: Are you buying a brand new home?

The other side to the equation is staying in your current home and making it better; more livable, shiny, new, fresh...Facebook worthy!

Here are the costs to consider when improving or renovating your home. This scenario makes the assumption that you will be accessing your equity to improve your home.

  • Appraisal: $300; to determine market value for equity leveraging
  • Mortgage payment: What is the overall increase per month with the additional funds?
  • Permits/Plans: Are renos structure or surface? New floors, new paint etc...
  • Product to be used: Cost to purchase new flooring, paint etc...
  • Demolition: Cost of disposing of the materials correctly.
  • Installation: Can you do it or do you need to hire a contractor?

Both scenarios create disruptions in life. Which one makes more sense for you and your family? Moving can have long-term effects, whereas improving is a short-term impact with living in a construction zone.

Either of the options is a great journeys. Don't focus on the destination. Make sure you consult with your Mortgage Broker first to consider all the costs and qualifying ramifications. The lending landscape is constantly changing; don't assume you will qualify for a mortgage today because you qualified for one 5, 10, 15, 20...years ago.

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Getting a Mortgage While on Parental Leave

By Michael Hallett • 01 May, 2024
Chances are if the title of this article piqued your interest enough to get you here, your family is probably growing. Congratulations! If you’ve thought now is the time to find a new property to accommodate your growing family, but you’re unsure how your parental leave will impact your ability to get a mortgage, you’ve come to the right place! Here’s how it works. When you work with an independent mortgage professional, it won’t be a problem to qualify your income on a mortgage application while on parental leave, as long as you have documentation proving that you have guaranteed employment when you return to work. A word of caution, if you walk into your local bank to look for a mortgage and you disclose that you’re currently collecting parental leave, there’s a chance they’ll only allow you to use that income to qualify. This reduction in income isn’t ideal because at 55% of your previous income up to $595/week, you won’t be eligible to borrow as much, limiting your options. The advantage of working with an independent mortgage professional is choice. You have a choice between lenders and mortgage products, including lenders who use 100% of your return-to-work income. To qualify, you’ll need an employment letter from your current employer that states the following: Your employer’s name preferably on the company letterhead Your position Your initial start date to ensure you’ve passed any probationary period Your scheduled return to work date Your guaranteed salary For a lender to feel confident about your ability to cover your mortgage payments, they want to see that you have a position waiting for you once your parental leave is over. You might also be required to provide a history of your income for the past couple of years, but that is typical of mortgage financing. Whether you intend to return to work after your parental leave is over or not, once the mortgage is in place, what you decide to do is entirely up to you. Mortgage qualification requires only that you have a position waiting for you. If you have any questions about this or anything else mortgage-related, please connect anytime. It would be a pleasure to work with you.

Bridge Financing and Deposit Lending

By Michael Hallett • 24 Apr, 2024
Let’s say you have a home that you’ve outgrown; it’s time to make a move to something better suited to your needs and lifestyle. You have no desire to keep two properties, so selling your existing home and moving into something new (to you) is the best idea. Ideally, when planning out how that looks, most people want to take possession of the new house before moving out of the old one. Not only does this make moving your stuff more manageable, but it also allows you to make the new home a little more “you” by painting or completing some minor renovations before moving in. But what if you need the money from the sale of your existing home to come up with the downpayment for your next home? This situation is where bridge financing comes in. Bridge financing allows you to bridge the financial gap between the firm sale of your current home and the purchase of your new home. Bridge financing allows you to access some of the equity in your existing property and use it for the downpayment on the property you are buying. So now let’s also say that it’s a very competitive housing market where you’re looking to buy. Chances are you’ll want to make the best offer you can and include a significant deposit. If you don’t have immediate access to the cash in your bank account, but you do have equity in your home, a deposit loan allows you to make a very strong offer when negotiating the terms of purchasing your new home. Now, to secure bridge financing and/or a deposit loan, you must have a firm sale on your existing home. If you don’t have a firm sale on your home, you won’t get the bridge financing or deposit loan because there is no concrete way for a lender to calculate how much equity you have available. A firm sale is the key to securing bridge financing and a deposit loan. So if you’d like to know more about bridge financing, deposit loans, or anything else mortgage-related, please connect anytime! It would be a pleasure to work with you.
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