In life, our major goals are to become happier, healthier, and wealthier as time goes on. Typically, this means moving up in our careers, building a family, and creating a life of luxury and contentedness.
However, as things progress and our families get bigger, we often find ourselves needing a larger home. If things are going as planned, by this time, you should have the finances to accommodate upsizing your home. However, before you make any big moves or commitments, there are a few things to consider.
We want to help you make sure your process of trading up is as smooth and successful as possible. Keep reading for our top nine tips on what to do when finding a bigger home for you and your family.
1. Assess Your Budget
Before upsizing your home, you need to figure out what you can afford. Maintaining a healthy monthly budget is vital for short-term and long-term financial security. You don't want to commit to payments that stretch your budget too thin.
Dig into your monthly cash flow to see how much you can comfortably afford to spend on a higher mortgage. This may mean cutting back on some of the other expenses in your life, liking dining out, shopping, and other unnecessary items. Nearly 53% of Canadians live paycheck to paycheck, don't become one of them because you didn't do your homework before making a big investment.
2. Figure Out What You Want to Do With Your Current Home
Once you're sure you can afford to upsize your home, you need to figure out what to do with the home you're living in now. If you and your family are renting a home, this process will be quite simple.
However, if you own your current home, you have two primary options. You can either sell it to help you afford your new home or keep it as a rental for an extra source of income. However, most people would prefer to sell their homes rather than taking on two mortgages, which means prepping the home for the market.
Additionally, understand that you may not be able to get approved for a second mortgage if you choose to hold onto your current home.
3. Get Pre-Approved for Your Next Mortgage
This leads us to our next step in upsizing your home, getting pre-approved for a mortgage. Talk to your lender or bank to find out what you're eligible for in terms of loan amounts and interest rates.
If you must sell your home before you can get approved for a loan, make that your top priority. Regardless, you need to know what you're looking at in terms of mortgage eligibility before shopping for your next house.
4. Save Money for the Mortgage Downpayment
Depending on the size of your mortgage, you'll need to come up with a varying minimum down payment. For example, if the loan is under $500,000, you only need a 5% downpayment.
If the purchase price is between $500,000 and $999,999, you need 5% for the first $500,000 and 10% for the remaining price. However, if you choose to put less than 20% down on any mortgage, you'll need to pay for mortgage loan insurance.
5. Consider All the Costs of Upsizing Your Home
Once you get approved for a mortgage, you need to start thinking about all the costs involved in upsizing your home. Take your finances we discussed earlier into account to make sure everything is within range of your budget.
For example, when you move into a larger home, you'll have more expenses. These include:
- Higher property taxes
- Higher utility bills (heating, cooling, electricity, etc.)
- Possible HOA fees
- Home repairs and maintenance
- And more
Additionally, moving into a bigger home requires furnishing a bigger home. You'll likely need to buy more beds, couches, shelves, and other necessities to fill the larger space. Make sure you account for these things in your budget.
6. Create a List of Priorities
When trading up into a larger home, you need to sit down with your family and come up with a list of priorities. You'll likely be living in this house for the next 10-20 years, if not longer. You need to make sure it meets all of your needs and expectations.
Ask yourself the following questions:
- How big a home do I need?
- How many rooms and bathrooms do we want?
- How close do I want to be to work?
- What school districts do we want to fall under?
- Should we find a place with parks and playgrounds nearby?
- Do we want our home to have special amenities (pool, firepit, patio, fenced yard, etc.)
- And more
It's okay to dream big and wish for the world, but make sure you have a clear idea of your top priorities that are non-negotiable.
7. Hire an Experienced Realtor
To help you find the home that's best for you and your family, we highly recommend hiring an experienced realtor. They can also help you sell your current home if you need to do that first.
Experienced realtors are familiar with the local real estate market and can help streamline the process of finding exactly what you need. Furthermore, they are skilled in the art of negotiation, which will be useful when negotiating terms with the seller.
8. Think Ahead
Before you sign any contracts when upsizing your home, make sure you're thinking about the future. Buying the home at the right time (during a buyer's market) could help you build positive equity in the home over time. If resale value is important to you, you also need to consider the neighbourhood and whether it's growing or in decline.
Additionally, if you're taking on a larger mortgage payment, you need to think about your financial longevity and job security. For example, if you work in sales and are having a great year, making the mortgage payment maybe a piece of cake. But what if you weren't having a great year?
9. Make an Offer
Finally, when you have all of your ducks in a row, there's only one thing left to do - make an offer on your next home. Use the advice and guidance of your realtor to make sure you're getting a good deal.
It's okay to come in with a low offer, just don't make it so low that you offend the seller or they decide not to take it seriously. If you make a super low offer, they may not even respond or send a counteroffer at all. And remember there are other things to negotiate with other than price, such as:
- Closing costs
- Realtor fees
- Appliances
- Furniture
- Window treatments
- Decor
- And more
Lean heavily on your realtor if you don't have much experience negotiating real estate deals. They'll help you get the most value for your offer.
Are You Ready to Upsize Your Home?
Upsizing your home can be an incredibly exciting and rewarding experience. Just make sure you follow the tips listed above to ensure your transition into a larger space is smooth and stress-free.
And if you're ready to start looking into your options or need help selling your current home, we're here for you. Contact us today to get in touch with our top agents.