Buying & Selling Simultaneously

A Smooth move
Buying and selling simultaneously
Jackie Woodward // Mortgage Broker // TMG
info@mortgagegirl.ca // 780.433.8412 // www.mortgagegirl.ca

You own a home now, but it’s time to make a change.
If you’re moving up or downsizing you probably have
questions about how it all works.
This article is about the logistics of buying another
home while you still own your existing property.
Here are 10 facts you need to know about navigating
through the two transactions at once to make the
move as smooth as possible.
A
Smooth
Move

GET THE FACTS ON
YOUR EXISTING HOME
A
Smooth
Move

Find out the value of your home by asking a realtor to
provide you with a detailed market evaluation. Or get a
detailed estimate of value by paying for an appraisal by a
licensed appraiser. This will give you an idea of what
residual funds you will net from the sale of your existing
home which will determine how to structure a new
mortgage for the new home.
Be conservative when working with the downpayment
amount so you have some wiggle room when negotiating
the sale of your current home.
A
Smooth
Move

After you have determined what new mortgage amount you will require,
you will then need to contact your current lender to ask them 3 questions;
1) Is the mortgage portable to a new property?
2) If it is and you are moving up, can the new mortgage rate be “blended”
and what will that new rate be in order to avoid paying a payout penalty.
3)Lastly, if you were to pay the existing mortgage out in order to get a better
rate, what would the penalty be?
Do be advised you are required to qualify for any new mortgage whether
you “port” the existing mortgage to a new property or get a brand new one
as you are effectively only “porting” the terms of the mortgage.
A
Smooth
Move

You now need to decide how you’re going to sell your
current home.
Although there are other options available to sell your
home, I will always recommend using the services of a
realtor as I personally would like to leave any showings
and negotiations with any potential buyers in the
hands of a professional.
A
Smooth
Move

FINANCING YOUR
NEXT HOME
A
Smooth
Move

Based on your initial findings about your current
residence, I recommend obtaining a pre-approval for
your next purchase as this will give you an idea of
what kind of requirements you’ll need to meet in order
to be approved for your next mortgage.
A
Smooth
Move

Your new mortgage may contain a condition to
confirm your existing place has sold. This could be for
either downpayment or qualifying purposes or both.
See if a back-up plan is possible in case your existing
home does not sell by the time you take possession of
the new home.
Your mortgage professional can work through a few
potential scenarios with you until you’re comfortable
with the options you have for all possible outcomes.
A
Smooth
Move

Perhaps you are looking into the possibility of keeping your current
home and turning it into a rental property. Some lenders will allow
this as long as you can qualify to carry both properties. Talk to your
mortgage professional about the option of including potential rental
income to help you qualify.
Be aware the lenders tend to calculate the inclusion of rental
income differently, so if you don’t qualify with your current lender,
check others.
If you are leaning to keeping both properties, ensure you explore all
options in accessing funds for the downpayment on the new home.
Is a gift from a family member a possibility or do you have sufficient
funds in savings, or can you look at refinancing your current
residence to access the equity.
A
Smooth
Move

If the downpayment is coming from anywhere other than
the sale of your existing home, the requirements are pretty
straightforward, your lender will look for the paper trail to
support the source of the funds being used.
If the downpayment funds are coming from the sale of a
property, you’ll be asked to confirm what your equity
position is via a current mortgage statement as well as a
copy of a fully executed sale agreement for your current
residence along with all condition removals related to that
contract.
A
Smooth
Move

Qualifying for your next home will be similar to getting
approved the first time. Your lender will be looking at the
usual application aspects like income, credit,
downpayment, and the property you’re financing.
If your income or credit profile has changed drastically
such as you becoming self-employed or your credit isn’t as
good as it used to be, be sure to have a conversation with
your mortgage broker about how the qualifying process
could differ from the first time around.
A
Smooth
Move

While many of our mortgage rules have changed,
document requirements haven’t changed too much
since you last qualified.
What you’ll be asked to provide will be dependent on
your current financial profile. Your mortgage
professional, along with a mortgage pre-approval will
give you an idea of what you’ll be asked to provide in
terms of supporting documents.
A
Smooth
Move

If the possession date for the sale property is after your purchase
possession date and you need those funds for downpayment, worry not
as there is a solution known as bridge or interim financing. The lender will
not only finance your mortgage, they will also give you a short-term loan
to cover the downpayment. This way the seller gets their money and you
get possession of your new home even though your old home is still
technically yours.
Once your existing place has sold, your lender will recover the funds they
lent to cover your downpayment. It is important to note that you must
have an unconditional or firm offer for your existing home in order to
qualify for bridge financing.
Be aware not all lenders offer bridge or interim financing and the terms
and costs for this service with the ones who do can be quite different, so
double check the conditions before you commit.
A
Smooth
Move

It can be stressful to sell and buy simultaneously and as you can
see from the previous slides there are a lot of things that need
to go right in order for everything to go smoothly for you. The
best way to ensure a smooth move is to do your research first.
Explore your options until you find one that allows you to
confidently move forward into your next home while leaving
the last one fondly behind.
A
Smooth
Move

Jackie Woodward
Mortgage Broker, TMG
780.433.8412
info@mortgagegirl.ca
www.mortgagegirl.ca
Twitter @mortgagegirlca

Buying & Selling Simultaneously

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