Thinking of buying your first home?
Thinking of upsizing your home?
Thinking of downsizing?
Thinking of investing?

A home is where we spend most of our time. For most people, their home is their most valuable asset.
Your Real Estate financial plan should focus on what matters most: Real Estate.

We will discuss the main factors to consider that formulate your Real Estate plan.

What is my home worth?

Most neighbourhoods within the GTA have increased by over 20% in the past 3 months alone. We recommend that at least once a year, you should obtain a market valuation for your home to keep track on how much your property is worth. This not only allows you to monitor its appreciation over time, but helps you make important financial decisions, such as establishing the right budget for a home renovation.

Appreciation

Will this double-digit market growth continue? Or will the market crash? It’s impossible to predict, but what’s important is for you to formulate your opinion prior to making a move, and then calculate around it. 

• 2% approximates annual inflation and is a healthy PlanEstimate in a stable market.

• Areas experiencing significant growth will be far higher – can be over 20%.

Purchasing a home for $700K and expecting it to increase by 2% per year vs. 12% per year will look vastly different over 5 years.

2% Growth per year over 5 years -$772,857

12% Growth per year over 5 years- 1,233,639

Chart by Visualizer

What will a home cost?

Purchase prices vary between regions, cities, neighbourhoods, and of course, depending on the type of property. While most people assume the annual year-over-year statistics are the only factor to consider when home pricing, it’s not that simple. Just like the classic apples vs oranges comparison, it would be unwise to directly compare a downtown condo to a newly built detached home in the suburbs.

We suggest you pick the top 3 neighbourhoods or cities you would like to live in, confirm the type of home (detached, town, condo, etc.), and monitor the prices. In the end, the best approach is to take what the market gives you.

Moving Costs

Now that we have addressed the sale and purchase price of homes, it’s also important to consider other transaction costs such as:

It’s common to overlook these expenses, but remember they can add tens of thousands to your total expenditure.

Mortgage rates

Are rock bottom rates (1-2%) here to stay? Or will rates rise to historical levels of 5%-6%? Stress testing requires mortgages to be approved at a higher qualifying rate of 4.74%, but what if you actually were subject to these higher rates when rates rise?

Let’s take a recent example from one of our clients, that purchased their first home for $650K with a minimum down payment:

* 5% up to $500k, 10% required over $500K
**$9,475 land transfer tax (would be double in City of Toronto), legal fees including title insurance ($2,000), tax on CMHC premium ($3,175)

Table by Visualizer

Their monthly payments would increase significantly from $1,127 to $3,689 and despite this, the mortgage remaining after 5 years would be $34,711 higher. That’s a swing of $102,331 notwithstanding the time value of money during and after the 5-year period!

We hope you can see it’s just as important, if not more so, to find an experienced mortgage broker as it is to find a competent realtor. 

Don’t Worry

By getting your Real Estate Financial Plan, you will take advantage of everything you can control. Whether it’s selling at the right time and purchasing at the right cost and investing funds tax efficiently, or a combination of them all, your Real Estate Financial Plan is the starting point to make your best move. At Planulife we have Real Estate Agents, Chartered accountants and Mortgage Brokers that can help. Why not create your own profile and let our AI-powered app do the rest? After all, the best move is one that you plan ahead for.