Is your family ready to move from a starter home into something bigger? More living space can mean a better quality of life, whether it’s another bedroom, a more spacious kitchen, or your first private backyard.
At the same time, acquiring more square footage isn’t always as simple as it sounds. The process comes with some unique financial and market challenges. Knowing what they are and how to rise above can help ensure that the property you buy truly meets your family’s needs.
If you’re a move-up buyer looking for a roomier home, you likely have questions. In this post, we’ll help you plan your next steps while determining how much house you can comfortably afford.
What should you look for in your next home? Download our Complete Guide to Buying a Home in West Toronto to learn everything you need to know about the neighbourhoods, the market, the home-buying process, and a lot more!
Buy or Sell First?
Should you buy a house without selling yours first? Or is it safer to have the cash in your bank account before beginning your hunt? This decision is one of the first of many. The answer will depend on a few factors.
Buying first can be more convenient. Let’s say you find the house of your dreams—or a deal that’s too good to pass up—before you put your home on the market. It may benefit you to buy first in this situation as long as you take into account all the financial risks involved.
The biggest is that you may wind up paying two mortgages for a while if you don’t make a quick sale. Before deciding which step to start with, consider weighing the pros and cons of both options with a qualified agent.
A successful upsizing experience depends on selling your home and achieving the maximum results. The posts below can help:
- When Is the Best Time to Sell a House in Toronto
- How to Sell Your House: Before You Begin
- Home Renovations That Add Lasting Value
How Does a Bridge Mortgage Work?
Cash flow issues can happen if you decide to buy first. Even if you have the funds, they are likely tied up in investments or other assets and not necessarily readily available. Now imagine that the closing date of your new home is fast approaching and will precede the closing of your own sale.
The gap in timing means you won’t get the funds in time to pay for your new house. Thanks to a resource called bridge financing, this does not mean you have to pass up on the home of your dreams or face the possible legal consequences of backing out.
What is a bridge mortgage? It’s short-term, interim financing that can help you carry the costs after your new house closes and before you get the money from the sale of your existing property.
To qualify, you need a firm offer on your new home. The qualifying amount is based on your earnings from the sale of your home minus your existing mortgage balance and closing costs. The loan is usually good for 90 to 120 days, which should be enough time to cover the gap between closing dates.
How Much Does Bridge Financing Cost?
As with any loan, the cost will depend primarily on your creditworthiness and how much you intend to borrow. Still, bridge financing is considered riskier for the lender, so interest rates tend to be higher. Plus, there’s only a short window for the bank to earn interest, so they’re even more eager to recoup their investment.
There may also be an administration fee and some legal costs to set up the loan. There are no installments with a bridge loan. Instead of paying monthly, you repay in full, plus interest, once you receive the funds from your transaction.
If something happens and your sale doesn’t close as anticipated, you could also need to cover two mortgages plus the interest on the bridge loan until your transaction finalizes. Working with an experienced real estate team can help you avoid many of these risks.
If you’re on the hunt for a bigger or more luxurious home in Toronto’s West End, here are some resources that can help you plan:
- What Should You Look for in a Home Inspection Report?
- Home Buying Checklist
- Buying an Older Home In Toronto’s West End
Budgeting for More Space
Now that you have a better understanding of your financial options, you can begin thinking about what you want and need in your new home. You’ve assessed your finances and understand any possible risks, and have determined that you can, in fact, afford more home—but how much more?
Start by reviewing the listing price on homes that are valid contenders. However, remember that’s just the beginning. Take the listing price, now add up all other closing costs as well. Some of these will need to be paid in cash before you can close on your new place. Others, like mortgage insurance, can be part of the mortgage and spread out over time.
In addition to all of this, you’ll want to cushion your budget for renovations, both unexpected and planned. Since we’re on the subject of budgeting, be aware that heating, cooling, and maintaining a bigger home will almost always add to your living expenses.
A bit of analysis and forethought can help you come up with a reasonable price range. That way, you don’t waste your time or risk the heartache of falling in love with a home you can’t afford.
Are you still wondering “how much mortgage can I afford?” You can get an estimate by using our mortgage affordability calculator.
What Are Your Needs?
The idea of more space – and maybe a bit more luxury – is exciting, but you need to be strategic about it. What does your family really need versus things you just want really badly? It’s okay to have wants as well as needs.
Just be clear on which is which so you know when to be flexible and how much negotiating power you have. Everyone has different priorities. The items on your list might look something like this:
- More storage space? If all of your closets and drawers are bursting at the seams, this may be a legitimate need.
- An additional bedroom so the kids don’t have to share? Peace and tranquillity for everyone? That could definitely be construed as a need.
- A fully enclosed, all-season sunroom off the back deck? As decadent as that sounds, that could be an example of a want, not a true need.
Look at your daily routine and consider how you tend to use the space you have now. Be aware of any areas that get overcrowded. Perhaps there’s a lineup to use the washroom every morning.
Maybe your family spends time together in the living room, and having a bit of extra square footage could make those experiences more enjoyable. Whatever your space needs are, try to be aware of them before you start searching.
Finally, we come to the fun part – choosing your new Toronto neighbourhood! The posts below will give you a few points to ponder:
- 5 Reasons To Love Living in Swansea
- Why Buy a House in Bloor West Village?
- 5 Reasons Baby Point is an Incredible Place to Live
The Neighbourhood
When you’re buying a new home, it’s not all about your living space. It’s also about location. Ideally, you want to find a neighbourhood that’s convenient for you—and one that you love.
That’s why it’s important to think carefully about your finances and where you can afford to buy more space. Homes in the city’s core almost always come at a premium. For this reason, purchasing a larger property might mean living less centrally.
Fortunately for Torontonians in the west end, there’s no shortage of vibrant residential communities here (from Swansea to the Junction). While some areas are more affordable than others, an agent with neighbourhood expertise can help you find some options that will work for you in the community of your dreams.
Finding the Right Agent
For many move-up buyers, the hardest part of finding the right house is getting started. The home-hunting process can be intimidating, even when you have the means to afford more square footage.
The good news is, once you choose the right agent for your home purchase, everything else will start to fall into place. During your search, look for someone who has a great track record.
Ask each professional you’re considering working with about their experience with move-up buyers. And whatever you do, don’t forget to find out about their expertise in the neighbourhood where you want to live!
Are you a move-up buyer looking for more space in the west end? Get in touch with our West Toronto real estate agents at 416-769-3437 or email info@sidorovainwood.com. We know the neighbourhoods here, and we’d love to discuss your needs!
