Your small bungalow has become too cold in winter with foundation cracks and foggy windows. However, its value has doubled over the years. Should you relocate to a bigger home north of Bloor with a master bedroom and chef’s kitchen?
Or, should you upgrade your current home while staying in a great neighborhood with top schools and a close-knit community?
Item | Cost |
---|---|
Selling price of your old bungalow | $1,000,000 |
Less existing mortgage payoff | -$350,000 |
Less 5% realtor commission on sale | -$50,000 |
Cash on hand for downpayment | $600,000 |
Purchasing price of new home | $1,500,000 |
Closing cost (4%) | $60,000 |
Total cost of the new property | $1,560,000 |
To buy a new house, you need to borrow $960,000, including $110,000 in selling and buying costs. You will live in a $1.5 million home with $540,000 in equity.
Item | Cost |
---|---|
The square footage of your new house | 2,700 |
Average price per sq.ft. | $280 |
Total construction cost | $756,000 |
Add existing mortgage | $350,000 |
Total cost of rebuilt house | $1,106,000 |
Market value of rebuilt house | $2,500,000 |
To rebuild your house, you must borrow an additional $756,000 on top of your existing mortgage loan. You will be living in a $2.5 million home with $1,394,000 in equity while keeping your kids in the same school and maintaining your daily routine.