Valley First

Buying A Second Home?

Expert advice for repeat homebuyers

Spring is home-buying season. Homeowners clean up their yards, paint their decks, declutter their homes and adorn their lawns with a for sale signs. Generally, there is plenty of advice for first-time homebuyers. But, what about those who are hoping to sell their existing home and purchase another?

There are unique challenges with selling a home and buying another. There are also a few financial opportunities people may not realize.

Reinvest profits from home sales
Homeowners may have profit to re-invest after selling their first home. While it's common to shift all that profit into a second home, it could be an opportunity to start a new investment strategy or put money away for your children's education. Even shifting a small percent of the profits into investments can make a big difference in the long run.

Turn bad debt into good debt
Buying a new home is also a great opportunity to convert bad debt into good debt—and write off the tax as well.

Interest paid on a traditional mortgage is not tax deductible in Canada. This is called bad debt. But, certain mortgages give you the opportunity to convert money owing into good debt. When you pay down your mortgage, you can re-invest the available capital into income-producing assets which makes the interest paid tax deductible. Simply put, over time you are converting your mortgage into an investment portfolio.

Don’t forget the fees
Remembering details like CMHC fees can also save people a significant amount of money the second time around.

CMHC fees can sometimes be a huge surprise to first-time homebuyers, so don't make the mistake of forgetting them on your second purchase. To avoid the fee, purchasers need at least a 20 per cent down-payment, so factor in what that would be and stick within that price range.

There are many other fees that come with selling a home and buying a new one, including real estate fees, property transfer tax, appraisals and legal fees and inspections. There's also home insurance and mortgage protection insurance or life insurance to consider.

Be aware of mortgage penalties
Finally, selling a property will often result in mortgage penalties. However, there are ways to avoid yet another costly bill.

Port the mortgage instead of paying it off and applying for a new one. By doing this you are simply re-applying for the difference between the two homes instead of needing approval for the full amount. If you do decide to break your contract, many financial institutions will refund the fee within a certain time frame if you agree to stay a customer. Remember to ask, though, because not all will tell you it's an option.


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We encourage you to visit a representative at any of our branches for more information on how Valley First can make things simple!

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