Nisha Muire

If you are a senior with a paid-for home in Toronto, you might be tempted to tap into all of the money accumulated in your home with a reverse mortgage. After all, if you bought in the 1980s you home could well be worth close to or over a million dollars depending on where it is located. Beware though, that however tempting a reverse mortgage might sound, it should be entered into very carefully, with the full awareness that you or your heirs could lose al of the equity in your home and have nothing to show for it in the end.
 
Reverse mortgages allow you to borrow a maximum amount of the equity in your home. Usually it can be up to 60%. The money can be paid out to you in a lump sum or monthly and it is tax-free. However, remember that while you may have this money up front, you will still be incurring monthly interest fees that you don’t have to pay back – but those interest fees can quickly climb to eat away at the remaining equity in your home. Furthermore, most reverse mortgages are valid for as long as you live in your home – meaning that if you are forced to move to an assisted living facility, you or your heirs will have to repay the loan in full. If you don’t have the money, then you will lose your home as well as any money saved up and won’t have any more money to fund the rest of your retirement needs.
 
Although you will never own more than the value of your home when you leave, if you have passed on and your heirs want to keep it, then they will owe the difference between the sale of the home and the value. For instance, if your finale mortgage value is $500,000 but your home only sells for $450,000, if your heirs want to keep the home, then they will owe the bank $50,000. But if they don’t want to keep the home, then they will not owe this money. However, if you must move to an assisted living facility, the sale of the home will cover the mortgage, but then you will be left with nothing to live on.
 
Also, keep in mind that financing a reverse mortgage is expensive up-front, with closing costs coming in at around 10% of the value of the mortgage.
 
Reverse mortgages sound like a good idea, but they should be entered into very cautiously and with your eyes wide open to their pitfalls.

Now that you have your first Toronto property and you have been paying towards it for a year or two – maybe more, you have definitely built-up equity in your place. The equity built adds value to your overall financial bottom line. Lately, with interest rates being as low as they have been for the last decade or more, many homeowners have been tempted to use the equity built up in their homes – is this a good thing or a bad thing? Well, the answer lies in how you use that equity.
 
There are some very good reasons to use the equity built up in your home – and all of those increase your overall net financial value over time.
 
The good:
 
Using equity to finance improvements to your home
Using the equity in your home for renovations and updates is one of the best reasons to pull the money out of your home. Renovations – especially to bathrooms and kitchens can increase your home’s value by up to 25%.
 
Buying more property
If you use the equity in your home to fund additional property purchases, this is another very good thing as it will increase your net value as well as provide you with a steady source of passive income. However, you have to be prepared to deal with all of the ancillary issues that arise with owning income property.
 
Investing
Another good reason to use the equity in your home is to put it into secure investments that will grow at a higher rate than the rate of interest on your home. If you are confident that this is possible and you can achieve such returns, then using the equity to investment might be a good idea. However, if you are going to use it to gamble on iffy investments that have no real security, then you should leave your equity where it is.
 
Education
Borrowing the equity in your home is to further your education is another good investment. If you invest in your education, which in turn will lead to better career and salary prospects, then it is definitely a worthwhile investment – but, you must be determined to complete your education and to apply it for a better career and salary.
 
Debt consolidation
If your debts have spiraled out of control, it might be a good idea to consolidate all of them into your mortgage. However, you need to be extremely disciplined and stick to your budget so that you don’t once again fall into the credit trap – because then, it would have been a bad move on your part.
 
The bad:
 
You should never use the equity in your home to purchase anything that loses value such as cars, electronics, furniture, and vacations.
 
If you are not going to be able to gain anything except temporary pleasure or convenience from your purchases then they should never be made using the equity in your home.

Growing your Toronto property portfolio will take more planning and better nerves of steel than it would in other parts of the country simply because of the very high prices for real estate. If you are interested in building property assets, then it is incumbent that you get your feet wet as soon a possible.
 
Getting the down payment on your first property is the only way to property start on your road to real estate stardom. Once you have that first property, you should pay it down as quickly as possible. Building equity in your property will allow you to then leverage it towards your second property.
 
You don’t have to pay it off fully before using the value of the home to tap your next real estate down payment. Every year your property will increase in value. Add to that increase the fact that you will have paid off part of it and your stake in the property will growing exponentially. When you have enough equity in your existing property you can then borrow against it to fund your next property purchase.
 
As your next purchase will likely be an income property, that next property, if you play your cards right, will be able to finance both your mortgages so that you can save your money for other projects or your third real estate investment.
 
Owning property does come with risks and you must be ready to troubleshoot problems with plumbing, electricity, maintenance, etc… you must also be prepared to deal with difficult tenants. However, if you are able to manage, then your investments will pay off big-time in the end.

Moving from one Toronto home to another can either be daunting or a hassle-free endeavor – depending entirely on the amount of planning you put into it. The best way to ensure that your move goes smoothly is to plan it smartly. By “planning smartly” we mean setting up timelines and goals for each stage of the process. It is only with meticulous planning and prep that you will be able to achieve a stress-free move.
 
Once you have sold your home and you are anticipating moving into your brand new Toronto home, it is time to start planning. Make a list of all those items that need to be done before you leave your old residence. We’ve compiled a brief checklist of things you should plan for before you move:
 
2-3 month before:
Find movers
Sort your stuff into piles to give away, keep or sell
 
4 to 6 Weeks before moving
Set-up mail forwarding
Get boxes and moving supplies and begin packing
2 to 3 Weeks before moving
Get phone service set up at new home
Arrange for utilities at new home
Change address on driver’s licence
Get files and prescriptions from doctor
Change addresses on subscritions, clubs, associations
Alert family and friends on change of email address if applicable
 
2 to 7 days before moving
Pack a suitcase that you will be traveling with
Pack essentials
Clean premises
 
Day of move
Supervise movers
Walk through home to ensure nothing is missing
 
The more you do before your move date, the better off you’ll be when the big day arrives.

Downsizing from your large Toronto home to a smaller place is a very personal decision that will be driven by several factors including your short and long-term goals, your financial situation and what you want your lifestyle to be.
 
The hardest part when downsizing is letting go of the past and the memories built in your family home. Naturally after building a life and raising a family in a certain place, cutting those ties will be a difficult thing to do. If you were used to hosting large family gathering during the holidays, it will mean that those traditions will have to change. However, if you are prepared to make that shift, then downsizing can be very liberating.
 
If you want to travel or just have more free time for yourself, then moving to a smaller place is an easy decision – especially if you trade in for a condo complex with full amenities. Even if you trade in for a smaller house with less property and maintenance costs will free up your time to do other things.
 
If you are now on a fixed income and your taxes and the maintenance costs on your big home keep going up and you are unsure of how you will sustain it long term, then selling and moving to a smaller townhome or condo will liberate your cash flow and even give you some investment money.

The other option would be to sell your big place and to rent – yes, rent! Contrary to the mantra of only investing in real estate, if you have a significant gain from the sale of your house, then investing it with a reputable wealth management company can provide you with a steady income in interest while preserving your capital and freeing you up from maintenance and worries about taxes.
 
Most people find downsizing a hard decision to make, but once made, it is often cited as one of the best decisions that they have gone with.

If you are wondering when you should move into a bigger Toronto house, the answer is actually not that complicated: when you feel ready. I know – this is much easier said than done. Understanding whether you are ready or not depends on several factors:
 
Your after tax/deductions salary
The appreciation in your current property
The area you want to move to
What you want in a larger home
Whether your current living situation is sustainable
 
Your after tax/deductions salary
The first item on this list is probably the most important one. If your take-home pay has not changed since you first bought your home, then you have to properly evaluate whether you would be able to realistic finance a larger property. If you have plenty of room left over at the end of the month for saving and spending, then you might be able to do it, but the only way to really determine whether you can support a larger home is put the numbers done and to project what your living expenses would be. Find out how much of a mortgage you would have to carry for a larger home, find out what the taxes would be, look into the utilities and maintenance costs and put all of these on your projected budget. If you can sustain the increase in maintenance and carrying costs, then you might be ready to move to a bigger house.
 
The appreciation in your current property
If you current property has increased dramatically in value, then even if your salary hasn’t increased a large amount, the gain can be applied to a larger home to bring down the mortgage you would have to take out on it – making it more manageable and feasible to move to a larger place.
 
The area you want to move to
If the property values in the area you want to move to have increased beyond what you can support financially (even with an increase in your own property), then you might want to reconsider moving or you might want to choose a different area. To ensure an easy and stress-free move, it is critical that you choose a property that is financially sustainable. The last thing you would want it to be house-poor.
 
What you want in a larger home
If you want your next home to have all the bells and whistles and be an executive-style property, then you should have the salary to sustain it, the increase in property value to give you the deposit you need and be found in an area that is affordable for you. However, if what you want is relatively modest and you are willing to put in some work to personalize it, then you can probably find something that will get you into a larger home sooner.
 
Whether your currently living situation is sustainable
The last factor on our list is also quite critical. If you are living in a two bedroom condo with three kids and another on the way, then you might need a larger place sooner than a family that is already in a three-bedroom home but want an ensuite or finished basement.
 
In the end, only you can determine whether you are ready to move to a bigger place. However, we hope that our list of things to look for has been of help.

If you are like most Toronto homeowners, at one point you will likely find yourself thinking about moving to a large home. However, given the current high price of real estate in the GTA, this is easier said than done. It is understandable for people to wonder how they will ever be able to climb the house ladder if they don’t earn enough to finance the large deposits. There is a simple way of moving up this seemingly unscalable climb if you are on the outside – the trick is to simply get in the door. Really.
 
As long as you are able to put together the deposit for your first home, then the rest will be easier. Once you have one property, you can use the appreciation value in that home towards financing a larger one.
 
For instance: if you purchase a condo for $200,000 and you put a $40,000 deposit on it your mortgage is $160,000. In a few years the condo will appreciate in value to about $320,000. Assuming that you have paid toward your mortgage you should have reduced your mortgage to about $145,000 and you should realize a gain about about $160,000 after closing costs (realtor, notary, moving charges, etc…) . The $160,000 can now be used as a 25% deposit on a home worth $600,000 or a 35% deposit on a home worth $450,000 – both values purchase you a much bigger place than the initial condo you started out with.
 
By trading up every few years, you can realize your dreams of larger home ownership regardless of what you start out with. Assuming that your salary will rise as your work experience and careers grow, sustaining a larger home will become easier. On the other hand, if you are happy in a smaller place, then you can use the profit from your sale to buy something in a less expensive, up-and-coming area, thereby further reducing your mortgage.
 
Regardless of how you play the game, real estate investment is usually a solid financial vehicle.

If you are a first-time Toronto home buyer, you must be wondering how to finance your first place. With the cost of renting nearly on par with actually buying a home, saving for a downpayment can be challenging. Since you need to put down a minimum of 5% for a high-ratio mortgage, you’ll need to figure out based on your income, ability to save and desire to own property and your timeline for getting into your own place, then it’s a matter of building a strategy.
 
The best way to determine what you can afford and how quickly you can raise a downpayment for your first place is by creating a realistic budget and projecting how much you can save every month and how much that will total in one year. Next you have to figure out if you want your first place to be a condo or a single family dwelling as that will definitely impact the price of the property you will buy and how much you will need to save for the down payment.
 
Several factors will affect how much your first property will cost – property type, location and condition. Generally the further out from the city, the lower the cost. Condos will be less expensive than townhouses, which in turn are less costly than detached homes. Resale properties also tend to be more affordable than new ones.
 
If you want to move into your own place as soon as possible, then set your house-hunting budget at a modest amount – say something under $300K. It will mean a down payment of $15K. If you can only save $5000 a year, then it will take you 3 years to gather the money. If you can save more, then it will be less. However, keep in mind that you will also need to save up the closing costs, which tend to run another $5,000-$15, 000 due to notary fees, welcome taxes, back taxes, insurance, etc…
 
Financing your first home is always the toughest part – but after that moving up is simple as you can draw on the equity of your existing property to fund your next home. As long as you are disciplined and have a goal in mind, you can make your dreams of home-ownership a reality.

Now that you know what you want from a new Toronto home, the next thing you need before hitting the market, is finding your mortgage comfort zone. Your comfort zone is what you can easily pay every month without fear of stretching your budget too far. Determining this comfort zone is crucial to buying a home that is as much as you can handle and not more. Too many people find what they think of as their dream home, make an offer and move-in, only to them realize that they are now house-poor. They can pay their mortgage, but that’s it. They can’t afford any extras.
 
So, how do you find out just how much you can comfortably afford? It’s not hard. You just have to create a realistic budget projection based on your after tax take-home pay and all of your fixed expenses. Create an excel sheet where you list all of your monthly income. Only include your after-tax salary. Although banks will approve you at your before tax salary, that gives a false picture of what you can afford. It is always best to work with money you actually have in-hand.
 
Once you have listed your monthly income, next list all of your fixed expenses – these include anything that you cannot change such as rent/mortgage, insurance, debt repayment, car loans, utilities. After that list your moveable expenses such as food, gas, entertainment, restaurants, clothing, etc… You will quickly see what your spending picture is. The key to projecting a realistic budget is to estimate how much your new mortgage would cost every month and by how much your insurance, maintenance and utility bills will increase and include those numbers, as you will then get a much more accurate idea of what your extra overhead will be and how that will impact your monthly bottom line.
 
To find out how much a mortgage will cost, you can use any of the mortgage calculators that are offered online by the big banks. They are relatively accurate and will give you a solid idea of how much you can be expected to pay at different mortgage amounts and at different rates.
 
If you go into your next Toronto home purchase clearly cognizant of what it entails, then you can hit the market with confidence knowing that you can fully support the home you eventually buy.

House hunting in Toronto is always a fun prospect – but it can also be stressful and frustrating. Unless you have a clear idea of what you are looking for in a new home, chances are you will spin your wheels trying to find out while your dream home slips away. The best way to achieve success when looking for a new home is to clearly identify those elements that are “must-haves”, those that are “nice-to-haves” and those that are non-essential. For instance, if you definitely want an ensuite in your master bedroom, then knowing that will automatically eliminate a lot of homes that you would otherwise have visited for no reason. However, bearing this in mind, you should also give some places with potential a chance depending on how much work you are willing to put into a property to make it your own.
 
The best way to figure out what you definitely want in a home is to assess your current needs and list what could be improved in your current home. Do you need more storage space? Do you want an open-concept for entertaining? Do you want a playroom? How many bedrooms do you need? Listing all of those things that you would love to have in a new home will show you all of the possibilities and from there you can narrow them down into essentials and those things that would be just nice to have.
 
For some people, it is essential that all bedrooms be on the same level – for others this is not really a concern and are happy with bedrooms on different levels. Still others insist on ensuites while others are fine with communal facilities. Fireplace are another big draw for some but can put others off a property. If you are having trouble figuring out what is essential and what is not, think about it this way – what items will make your everyday life easier and more comfortable and for your stage of life? For a young family bedrooms on the same level would make more sense than for a family with teenagers or extended family. Others might have needs that extend beyond the home – for instance being close to public transit, walking distance to school or even shops.
 
Once you have a list of all those elements that you want in your home, then you can confidently hit the market with your agent knowing that you will be seeing only those properties that match your criteria most closely – saving you time and frustration. It will also give you a leg up on other house-hunters on the market as you will know immediately when you have found what you want.