UPSIZING MYTHS VS. REALITIES

Greenprint illustration

“MYTH” 1

My property has increased in value; so, I will be able to purchase a larger property without any friction?

 

REALITY.

That larger property you are interested in has also increased in value at an equivalent rate to your current property.

If a 10% increase in the value of your property increases your purchasing power, that same 10% can balance out, or even offset your purchasing power on the larger property you’re pursuing. The gap widens the gap over time.

If you were considering waiting on your purchase, the question becomes: Will my income increase over time? If so, the rising property prices over time will not be an issue for you. If that’s not descriptive of your situation, it would be best to buy sooner rather than later.

 

Note that if you are thinking of waiting for the market to calm down, the same principle also applies in reverse. If property prices stabilize, or decrease in the future, the price of your current property will likely be subject to the same trend. Your purchase will be easier, but selling could be more difficult. 

 

Example in numbers:

In 2019, in the same neighbourhood, a condo was selling for $400,000 and a house for $800,000.

In 2022, this same condo will sell for 30% more at $520,000, and that house would rise 30% to $1,040,000; 

Conclusion: The price gap between a condo and a house has increased by 30%; in 2019 the gap was $400,000, and in 2022 the gap is $520,000. 

 

Note that historically, houses and income properties have increased in value more than condos. If you are thinking of making the transition from one type of property to the other, sooner is better in order to maximize your buying power.

 

“MYTH” 2

 I don’t need a bank pre-approval because I already have a mortgage, and my house has appreciated in value.

 

REALITY.

If you want to buy a new property, with a mortgage, you will need to get a new pre-approval. This is required to show sellers that you have the financial ability to purchase their property.

Your current mortgage, or the equity in your property is irrelevant. As you saw in “MYTH” 1, there is a strong chance that the mortgage on your next property will be higher than the mortgage on your current property. 

 

“MYTH” 3

I went on the internet and checked my ability to pay for the property I am interested in, and since I will be selling my home, I don’t need a bank pre-approval because the numbers I saw work.

 

REALITY.

If you are thinking of buying before selling, the bank will take into account the mortgage on your next purchase, add that amount to your current mortgage, and calculate both against your current income.

This calculation, including both properties, reduces your ability to borrow, as the amount of your current mortgage is not assumed to disappear from the equation by the financial institution, through a sale that has not yet been completed.

 

“MYTH” 4

I have to sell my house before I buy, because I don’t want to pay two mortgages simultaneously.

 

REALITY.

A good mortgage representative, like the ones we work with and refer, will be able to do the proper calculations to verify whether or not you can buy a new property without having to sell your current property.

They are ready, trained, and able to advise you on the best course of action to take, to achieve your purchase goals.

 

“MYTH” 5

I will make an offer conditional on the sale of my property.

 

REALITY.

In this real estate market, an offer conditional on the sale of a property will be rejected 99% of the time. 

It is best to develop a sale and purchase strategy, with your real estate broker. Your broker will be able to implement, from a fleet of strategies, the best course of action to sell your current property and buy the next one. They undertake this while ensuring a smooth transition from one property to another.

 

“MYTH” 6

I want to sell my property, but I don’t see anything for sale that I like. I don’t think I’ll find a property that suits my needs.

 

REALITY.

In the last two years we’ve seen record numbers of sales.

A lot of properties are regularly listed, and these sell almost as quickly as they come into the market. 

This is the reason the number of properties shown for sale in your Centris search seems low. 

An important part of your real estate broker’s role is to advise you, to organize searches for properties that suit you (type, price, area, value…), to keep an eye out for you for any listings that will interest you, and guide you in developing a strategy to effortlessly land your ideal property.

 

SO…

You have evolved and there are good reasons why your home, and your investment, should evolve with you. 

You dream of a larger property, perhaps in a different neighbourhood, nearer to parks and amenities. You now need to be in the city, or in the suburbs; closer to work, or to a better school for your children.

It all starts with your bank pre-approval, and your experienced real estate broker!

We have a suite of tools that we will deploy to get you exactly what you are looking for. We have experience, and exceptional insight, at your disposal.

Our relationship with you begins with an initial consultation. Your broker at Équipe Mark-Andre Martel will clarify, and help define your real estate goals and needs.

#EMAMWINNINGSTRATEGY 

 

You’ll find here a list of our most trusted mortgage brokers. 

Choose the bank, or the mortgage broker that suits you. Drop our name. You’ll enjoy the best rates and five-star service.

 

Steve Vallières
Banque Nationale
steve.vallieres@bnc.ca
514-567-3900

 

Jean-Sébastien Niding
Desjardins
jean-sebastien.niding@desjardins.com
514-835-3661

 

Jessica Shen
BMO
jessica.shen@bmo.com
514-586-1055

 

Hussein Kraidli
RBC
hussein.kraidli@rbc.com
514-915-5555

 

Mathieu-Alexandre Poupart
ORBIS
mathieu.poupart@groupeorbis.com
514-519-1565

 

Philip Sanchez
Independent Mortgage Broker
psanchez@pretps.com
514-928-6848

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