Moving up or downsizing?

Are you thinking about moving up or perhaps downsizing? If so there are several things that you should consider regarding your financing and budgeting for planning the move.

You may believe that your mortgage is ‘portable’ should you decide to move to a new property but did you know that both you and the property must ‘re-qualify’ for the mortgage? You should speak to your mortgage broker to find out if you ‘qualify’ to port your mortgage before you start shopping for a new property or list your current property.

Here are also a few items that you should include in your budget to prevent any surprises.

• Realtor fees for selling your current home.
• An estimate of how much it’s going to cost to fix all the ‘little things’ that need to be repaired. You might want to consider a home inspection in advance of listing your home as you don’t want any unexpected surprises that may come up when the potential buyers do their home inspection. This way you can also control the cost and timeline of any required repairs.
• The cost of movers. Even if you DIY with friends there will still be a cost.
• Time off of work to meet with Realtors, lawyers, insurance people, etc. Some of this may be difficult to schedule for a regular day off.
• Mortgage penalties – Most mortgages are portable but some lenders may not be willing to approve the moving of your current mortgage to a new property. You may have to seek new mortgage financing with another lender as your current lender may have issues with the property – self-managed strata properties, former grow-ops, age restricted properties, etc. Or you may no longer qualify for financing with this lender due to all of the changes to mortgage qualifications in the last few years or changes in your own circumstances.
• Legal fees to complete the sale of your property, the purchase of your new property and new mortgage financing.
• Home inspection fees and appraisal fees for the new property.
• Property purchase transfer tax and possibly GST if you are purchasing new construction.
• Increased cost of home insurance.
• Perhaps you will now have a longer commute so your cost of transportation will now be higher.

So whether you are moving up or moving down, with a little bit of planning and budgeting all can go smoothly. Your first call should be a chat with your mortgage broker to ensure you qualify for your financing and then you can move forward with confidence.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.