Whether you just moved in or have lived in your home for 50 years, it’s common to wonder how long you should live in your home before you sell it. According to the Canadian Real Estate Wealth Magazine. there is no set time. What is more important is to consider these 6 key points.
1. Your mortgage and outstanding debt
One of the first and foremost factors you must consider when you decide to sell your home is your mortgage payment. If you want to make money when you sell your home, then your sale price must be greater than what’s left of your mortgage. When you first buy your home and begin to pay your mortgage, the first few years will go towards interest rather than the principal amount. This typically means that it’s more difficult to make money off your sale under 2 years. However, if you put a larger downpayment on your house, then your interest rate and mortgage will probably be smaller, making it possible to make money in a shorter amount of time.
2. Equity- the amount of capital you will have when sold
Building home equity is important. You’ll want to have a lot of equity built up when you decide to sell. The amount of home equity you’ve obtained depends on any remodeling or renovations you’ve made, as well as your mortgage. If the home you bought was already in tip-top shape, then it may be difficult to build equity. If you’ve remodeled the kitchen, bathroom, redone the flooring, or made other renovations around the house, then you have most likely gained home equity. You can also increase your home equity by paying off more of the principal on your mortgage.
3. Current market conditions
One of the more common reasons you’re eager to sell your home is to make money on your property. There are a few things to look out for when deciding if it’s a seller’s market and whether or not it’s time to make your move. If you notice the price per square foot in your area is increasing, chances are that homes stay on the market for a shorter time. You should also take note of homes near you that are selling. It might seem time-consuming, but don’t worry! We always keep track of recent home sales in the area and can send you an up-to-date market report.
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4. You’re out of space and need a bigger home
Maybe this was the first house you bought when you were expecting your first child and there were only three of you. Now with three kids and two dogs, there isn’t much space. Although it may be sad to move out of the home where you started your family, the happiness of your family may be greater than the cost of selling your home and buying a new one.
Other life situations like divorce, illness, financial, or even the need to downsize may also lead you to sell sooner than you originally planned. There are many factors and taking the time to research is key.
5. Speculation or capital gains tax
If you don’t qualify to avoid paying taxes on the sale of your home, you may not want to sell your home yet. To avoid capital gains taxes, you should make an effort to stay in your home for at least one year. Making a sale before one year could be a huge mistake. This could ultimately leave you without much equity. Especially if you have to pay speculation or capital gains tax. This applies to Canadian residents.
6. Closing costs are unavoidable
Closing costs are often overlooked but play an important part when it comes to selling your home. On average, real estate agents have a commission rate of 6% when you sell your home. You are also likely to pay a closing cost when buying a home, which can be between 3%-6% of the purchase price of the home. Keeping closing costs in mind before you sell allows you to budget this into your expenses and avoid surprises when it comes to closing.
So, Is It Time To Sell?
If you’ve already taken these factors into consideration and decided that it’s time to sell, take the first step and get your home’s value. If not, no worries! We’re here for you when you’re ready.