Home buying can be overwhelming, which is why we’ve broken down the steps to help you achieve your home upgrade dreams.
Let’s talk home upsizing. Whether you’re moving out of a condo or trading-up from your current home to accommodate your needs, the home trade-up process has a lot of moving parts you’ll need to consider. It’s a big step to take, but it can also be one of the most rewarding transactions you’ll ever make.
We’ve broken it down into simple steps so you can set clear expectations for a place to call your own:
1. Determine Your Home-Upgrade Readiness
Buying a home in Canada is a big step—one you’ll want to make sure you’re ready to take. Some questions and factors that might help you determine whether you’re ready for the commitment are:
- Do you need to sell your current home first?
- Can you realistically buy another home before you sell your current home or condo?
- Do you have enough savings for a down payment?
- Is your income steady?
- Are you ready to settle in a specific location?
- What does the local real estate market look like (buyer’s market vs. seller’s market)?
- Can you afford the maintenance and upkeep of a larger home?
If you answered yes to the above, then you may be ready to take your home-upgrading journey to the next step.
Not sure on the answers to those questions? Remember, you’re in control of your move. Not sure where to start? Consider booking a free consultation with Properly.
2. Know your buying power.
It’s important to know the home value of your existing property before you start looking at new homes. The value of your home or condo may have changed since you purchased it, and the difference in value may affect how much you can afford to spend on your next home depending on how much equity you’ve built up.
You can check the value of your home with Properly for free.
3. Figure Out How Much House You Can Afford
The price you pay for a home isn’t the only cost you need to consider when budgeting for a new home.
You’ve also got to consider any increases taxes, utilities for that specific home, homeowner’s insurance, and the age of the home and its systems. Also, you may need to put some money into repairs and upkeep as things break or age. All of these costs will likely be greater than what you’re paying now if you’re upgrading to a larger space with more complications.
A rule of thumb is to spend no more than 32% of your gross monthly income on your home expenses, including mortgage payment and utilities. In addition, your entire debt load (including the mortgage) should be no more than 40% of your gross monthly income.
4. Investigate the Costs of Buying a Home (Beyond Realtor Fees)
Aside from the down payment, there are a lot of other costs involved in upgrading a home. Real estate fees are one consideration, but there are many others. Most of these costs are wrapped into the closing on your home, but they’re still coming out of your pocket and may affect how much you can afford.
Typically, the higher the price of a home, the higher the closing costs. Additional closing costs in Canada can range from 3% to 4% of the home price. For example, if a home costs $250,000, then you can expect to pay anywhere from $7,500 to $10,000 in additional closing costs.
These costs may include but are not limited to:
- Property evaluation fee
- Land survey fee
- Title insurance
- Legal costs
- Prepaid property taxes
- Home inspection & water inspection
In addition, you will need to budget for moving costs. Even if you plan on handling all the moving yourself, you’re still putting wear and tear on your vehicle. Also, you may need to rent a truck or storage unit to facilitate the move.
5. Gather Important Documents for Your Mortgage
When you apply for a mortgage, you’ll need to furnish several documents to submit your application. Here’s a basic checklist to get you started:
- Proof of employment, including salary information (a paycheck stub or letter from your employer will do)
- Any additional sources of income
- Bank savings and investment statements
- Documents related to any outstanding debts, such as a car loan
Your lender may have additional requirements to buy homes in Canada. You may also want to get a mortgage pre-approval before you start shopping for a home, especially if you are currently paying a mortgage on your current home. You want to know with confidence what you can get approved for and feel certain you can manage two mortgages if your current home doesn’t sell quickly.
6. Start Searching for Properties
Once you’ve laid the groundwork, it’s time to start searching for homes for sale in Canada. You can connect with a Realtor in your chosen market or start looking at homes online to narrow your options before reaching out to an agent.
Properly makes it easy to check your current home’s value and start looking for homes for sale in a single location.
Check your home value at Properly.ca/Proper-Price to get started or look at new homes at Properly.ca/buy.