Are you move-up Buyers? Are you looking to upgrade your current condo or house to a bigger house or better neighbourhood? If that sounds like you, read on.

SHOULD YOU BUY OR SELL FIRST?

While there is no ‘right’ answer, it’s important to know the potential pros and cons of both options. Regardless of whether you buy first or sell first, it’s a good idea to have a contingency plan in case your closing dates don’t align, leaving you with two homes, or no home, for a period of time.Buying first can make the house hunting experience more enjoyable. Without a closing date looming on your existing home, you’ll have time to wait until the right home comes up for sale. It can also be less stressful knowing that if your offer is unsuccessful, you can wait for the next opportunity to come up.

The downside to buying first is it can make the selling experience stressful, and if you are unable to sell your home fast enough, you will find yourself owning two homes at once. The result could mean paying two mortgages at the same time, not to mention all the other costs of home ownership, which may make it difficult to get a mortgage for the new home.

As a buyer with an existing home to sell, you can protect yourself by making your offer conditional on the sale of your current home. That means if you’re unable to sell within a specified period of time, you’re able to back out of the transaction. However, it’s worth pointing out that this condition will likely make your offer less attractive to the seller, especially if you’re buying in an area with a hot market.

If you sell first you could find yourself in a race against the clock, with your closing date looming and potentially no home to move into when the sale of your existing homes closes. If you’re not careful, you may end up rushing the buying process and settling for a home that isn’t ideal for you, or paying more than you planned because you feel pressured.

Regardless of which route you choose, it’s a smart idea to have a back-up plan in place in case you are left with two homes, or no home, for a period of time.

If the sale of your home closes first, you might consider a short-term rental or moving in with family or friends. This could be better than settling for a less-than-ideal home because you are rushed.

If the purchase of your new home closes first, you might need something called “bridge financing” to cover the down payment and other closing costs until the sale of your current home closes. For bridge financing, you must have a firm sale of your existing home.

HOW BIG OF A MOVE-UP SHOULD YOU MAKE?

Selling and buying are expensive – there are legal fees, inspection an appraisal fees, real estate commissions, moving costs, utility set-up costs and more to consider. If you’re going to make a move, make it count. If you need more space but don’t have that much more budget, consider a neighbourhood change.

HOW HAS YOUR LIFE CHANGED AND HOW WILL IT CHANGE?

Do you plan on being in your new home 3, 5, 10 or 20 years? Depending on your age and family situation, you’ll likely need to think about things you didn’t have to consider the last time you bought a home. Do you need to be near daycare or schools (elementary and secondary)? Should you consider getting a house with a second apartment for a nanny or housing aging parents? Are you a dog-owner now and need a backyard, or need to be near off-leash parks?

WHAT DO YOU LOVE ABOUT YOUR CURRENT NEIGHBOURHOOD? HOW DO YOU WISH IT WAS DIFFERENT?

There are always compromises to make, even when upgrading to a more expensive home. Do you love being able to walk to coffee shops and restaurants? Or do you long for green space and want to be closer to parks and trails? What about your commute, or proximity to transit?

WHAT DO YOU LOVE MOST (AND HATE) ABOUT YOUR CURRENT HOME?

You know what they say about the devil you know vs. the devil you don’t. Do you love your current kitchen storage? Dream of closets? Do you hate shovelling your current driveway and want to live close to work so you can live car-free? Has your ensuite bathroom saved your marriage?

HOW MUCH HOUSE DO YOU NEED?

One of the top reasons people want to move is to have more space but how much space do you really need and where do you need it? If your family is growing, you probably need more bedrooms, possibly another bathroom and some sort of playroom. Alternatively, you might be looking for more or different space – a home office to house your business, a bigger entertaining area, etc.

WHAT KIND OF HOMEOWNER HAVE YOU BEEN?

It’s time to be honest with yourself: have you maintained your current home or have you closed your eyes in the hopes that the water in the basement/leaky tap/squirrels in the attic would go away? It’s OK if you don’t like being a homeowner – buying a new (or newly renovated) house or townhouse might be a better option for you. If you hate gardening, why buy house with a big yard?

MONEY, MONEY, MONEY.

Mortgage rates are extremely low rate now, – you can borrow an extra $100,000 for under $450/month. How much more can you comfortably afford to spend without giving up your life? Your primary residence is one of the smartest investments you can make because your equity grows tax-free. But don’t forget that the new more expensive house will come with higher tax and utility bills.

WHAT DO YOU NEED TO DO NOW TO BE READY TO SELL YOUR CURRENT HOME?

More than a few move-up buyers fall in love with their new home as soon as they start shopping, but aren’t prepared to sell. If you start to prepare your current home now (de-clutter, fix any problems, etc) you’ll be able to jump on the home you love as soon as you find it.

SHOULD YOU SUCK IT UP AND WAIT?

Sometimes, the right decision is to wait. If you’ll be draining the equity in your current home or straining yourself financially to afford a new house, you might want to wait. One of our favourite strategies is to estimate how much extra your new mortgage will be and to start saving that extra money now so that you’ll be already used to the higher payments when you make the move. Bonus maneuver: put that extra cash on your current mortgage and build more equity.

I help move-up Buyers all the time – send me an email or give me a call if you want to talk through your options.

Co-written with Martin Breeze, Mortgage Broker, TMG The Mortgage Group