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TMG The Mortgage Group Alberta Ltd.

You have made the decision to sell your house and buy a new one and I am here to help!

This is a big decision and you may have a lot of questions, for example:

  1. Is it the same process as when I bought this house?
  2. When do I list my house?
  3. When do I start shopping?
  4. How does getting a mortgage work when I already have one on this house?

The process of buying and selling is similar to when you bought your current house but there are a few major differences.

  •  The first step is the same, talk to me and do a new application so we can see how much you qualify for to purchase a new home today.
  • Once we know what price range you can shop in, we can discuss whether you should port* your mortgage, which means move the existing mortgage to a new house, or if you should pay out the existing mortgage and start fresh with a new mortgage. There are pro’s and con’s to each of these and we will discuss them relative to your individual situation and decide which option makes the most sense for you.
  • Once we know what you qualify for and if you want to port your mortgage or start fresh, you then need to list your house.
  • The main concern in selling and buying is timeframes and when to do what. Most people list their house and start house shopping right away. If you get an offer on your house first, you have an option to put certain conditions in that offer, such as subject to you finding and being approved for a new house. Or, if you find a new house before you have an offer on your house, you can write an offer subject to the sale of your house by a certain date. 

Usually when someone is buying and selling, their down payment is coming from the equity of their current home. When it comes to possession dates, most people want to take possession of their new house before the sale date of their old house so they have time to move. This is possible as most lenders offer bridge or interim financing**. Bridge or interim financing is when the lender “lends” you the equity in your current home so it can go towards your purchase and then when the sale on your house goes through, the lender gets this money back. We have to factor in a few things when determining the amount of equity you have available for down payment. 

Costs associated with selling your home: 

  1. Sale Price = $350,000
  2. Realtor Fee (on $350,000 house sale) = $14,175 
  3. Legal fees to buy & sell = $3000 
  4. Mortgage balance = $300,000
  5. Total expenses (realtor fee + legal fees) = $17,175 
  6. Net sale proceeds (sale price – total expenses) = $32,825 

In this example, there would $32825 available for down payment on the new property. This calculation can vary from person to person or situation to situation so we will go over your numbers together to make sure we have factored in all the costs associated with selling your house or any additional expenses on the buying side you need to be aware of.

*It is important to note you can only port your mortgage once you have an unconditional sale on your current home 

** bridge or interim financing is available OAC through the majority of lenders but the cost and interest rate does vary and not all lenders offer it

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