We all know lives change and so do peoples needs. Whether it be an expanding family, a desire to rent a suite, add a sun room or other possible features, homeowners often come to a point where their current home leaves something to be desired. When such homeowners decide they need more space or want to make some changes to their living environment, they often set out in search of a different and better suited property. Please know that this is NOT the only possibility and there are other options you may find. The more information you obtain the more informed you will be and the better decision you can make for yourself based on each individual situation.
One of your other options, aside from searching for a new place to live, is to take some equity out of your house by refinancing your mortgage so you can preform the renovations you require to meet your new demands. But, this is not for everyone and the benefits you would reap would depend on how much of your principal balance you have already paid (ie. how much equity you have in your house) versus how much you still owe to the mortgage lender. For example, if you have $300,000 of equity in your house and only owe another $100,000 it would probably be to your benefit to refinance, take out $100,000 of your equity which would change your mortgage loan to $200,000. With this extra $100,000 you can hire a professional contractor to preform the desired renovations on your home. By doing so you can build out space, or recreate your space, exactly to your own specifications. This means no more searching for the perfect house you may have already dreamed up in a market that could have slimmer pickin’s.
There are a couple things you need to consider when deciding whether you should refinance or just make a new home purchase. Firstly, if you decide to refinance and renovate you will, ultimately, have minimal interruption to your life as compared to purchasing a new house. If you were to purchase a new home you would have to consider that you would be paying Realtor fees, lawyer fees and closing costs all over again. You would also have to factor in the cost of moving the entire contents of your home to another location, in addition to the stress and frustrations it may cause.
If you are at the stage where you are making this decision, you probably already know what and why you want to upgrade. If these goals cannot be accomplished by renovating you would really be left with no choice but to purchase a new place. An example of that would be if you were looking to build onto your home but your backyard is already too small to accommodate such an expansion. Secondly, you should look at the real estate market. If it is a buyers market, as it is right now, and it will be more challenging to sell your house, you might take a more serious look at doing renovations instead to save yourself the hassle.
If you are in a situation where you are looking to either purchase a new home or do renovations on your existing property then feel free to contact us and a Licensed Mortgage Broker would be pleased to help you determine which option is best for your current situation.