The Second Time Around Poses Challenges, Too

Second-time home buyers certainly know a thing or two about the purchase experience. But while the first trip round the real estate block was a learning experience, the second outing brings about a whole new set of challenges.

To begin with, next-time buyers have to juggle both selling and buying. Previously, only home buyers with nerves of steel would risk carrying two mortgages for a period of time; however, in sellers’ markets such as Toronto and Vancouver, you might consider it. But make your offer conditional on selling your home, if possible.

In a recent Toronto Star article, Kristin Kent notes: “Whether you buy first or sell first boils down to your needs and your financial status.” You’ll face the same costs as last time: Legal and agent’s fees, closing costs, home inspection charges, and moving expenses.

However, this time around you won’t be able to borrow from your RRSP for the down payment through Home Buyers Plan, and you can’t expect a rebate for the land transfer tax paid.

On the positive side, you may avoid buying mortgage insurance by using your equity to put down the 20 percent required.

There are also expenses in preparing your home for sale. Discuss the condition of your property with your real estate agent. In a hot market, you may decide to sell “as is,” but in most areas of the country, you’ll want to make your property shine.

Before you make the decision to list and/or start looking, a chat with your lender is in order. Can you get a bridge loan to buy a new property before you sell?

And can you take your mortgage with you? You may find it’s possible to “port” your mortgage to your new property, but you’ll only want to do so if the current rate and the time left on the mortgage are in your favour.

Your Home’s Not Just Your Castle: It’s a Money Maker

Ah, the retirement lifestyle – worry-free, toes in the sand, and visits with the grandkids. It sounds too good to be true, and for some, it is. But if you’re prepared to borrow and spend money and sacrifice some privacy, your home can be a source of retirement income. Not just your castle.

When the real estate market experiences a significant boom, like Canada’s housing market has in recent years, your home becomes a money-maker. And even (and maybe especially) house-poor homeowners can take advantage.

Anyone who has ever watched HGTV Canada’s Income Property knows the premise: You invest in a property, renovate all or part of it, and become a landlord. You’ll lower your mortgage costs and be able to save for retirement – or to invest in another income property.

If you own a high-maintenance home in a good neighbourhood and want to downsize, take advantage of low inventory levels in centres such as Toronto and Vancouver, and benefit from the appreciation in your home over the past few years. Particularly for owners of scarce detached or semi-detached properties in urban areas, your home may be worth more than you’d imagine.

The equity in your home can also provide a back-up plan if your savings account runs low. You may be able to borrow against the equity you’ve built up with a reverse mortgage or home equity line of credit.

These also provide a way to finance a grandchild’s education, renovate your home, or enjoy that retirement lifestyle…and fulfill those dreams.