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Are you ready to upsize your home? Often, as people’s families and savings grow, so does their desire to trade in their current home for something larger.
A new and bigger home can offer you the space and amenities you want and support the lifestyle you’re seeking. As with any major expense, it’s smart to factor in a range of financial considerations.
“There’s no doubt that home ownership is more than just the down payment or your monthly mortgage payments,” explains Pat Giles, Vice-President of Real Estate Secured Lending at TD. “There are many expenses buyers need take into account, from closing costs and land transfer fees, to possibly higher property taxes and additional maintenance.”
Tools like the TD Mortgage Affordability Calculator can help. Enter information like the area, your income, your anticipated down payment and your monthly expenses, and you end up with a price range in mind for a new home. This tool gives you an idea of just how much you can comfortably spend, while still being able to afford your other financial obligations, and the additional things that matter to you.
When doing those calculations, it’s prudent to be a bit conservative. For instance, part of the ability to upsize comes from what you can get for your current home. The assessed value gives you a hint. Consider different scenarios for your budget if you sell for about that amount, more or, to be safe, less than expected.
It’s often tempting to stretch your budget when home shopping. A TD survey found that 60 per cent of people are willing to exceed their budget on a home purchase, with 56 per cent saying they would go as high as $50,000 over their original budget.
To see how you can swing an upsize, consider test driving what your new mortgage payments will look like.
"Don’t just do it on paper", says Mr. Giles. “Actually put the money in a separate account so you know how much is left over each month.”
He suggests doing this for six months. By getting into the habit, you can validate that the new payments are sustainable. This test drive also allows you to accumulate that much more of a nest egg to put towards a new home.
The mortgage payment is just one of the costs associated with upsizing. A new home can also mean new costs for things like insurance, commuting and utilities.
Upsizing means more space, which may also come with extra maintenance, renovation and decoration costs both inside and outside the home.
All of those costs may be doable, but just need a closer look. Alan Tennant, CEO of the Calgary Real Estate Board, says do some research to ensure you have a realistic picture of what life in your bigger home will cost.
“Make sure you accurately estimate any renovation costs, preferably based on detailed estimates from experts you trust,” says Mr. Tennant. “Also, give some careful thought to your furnishing needs and expectations. You will enjoy moving into larger living space more if you don’t have any nasty cost surprises.”
The TD survey revealed that 97 per cent of homeowners would like to have factored in their other financial obligations when determining how much mortgage they could afford. That includes property taxes and home maintenance costs (54 per cent), and overall lifestyle expenses (33 per cent).
Bigger can be better. It’s about where you live and how you live. By considering the costs of upsizing and making a plan, you can pursue the home of your dreams.
“You want to make sure you can comfortably and confidently afford your mortgage – and your lifestyle,” says Mr. Giles.
Advertising feature produced by Globe Content Studio and sponsored by TD. The Globe’s editorial department was not involved.