The real estate market is booming, and so is the home renovation industry. It can be challenging to determine whether you should sell your home or renovate it to better suit your needs. To help you make an informed decision, we have compiled a list of seven crucial questions to consider.
1. What is your current interest rate?
If you have a low interest rate, it may be best to stick with it or switch to a fixed-rate mortgage. The Bank of Canada has raised its key interest rate to 0.5%, with analysts predicting a rise to 2% by the end of the year. As a result, mortgage interest rate hikes may occur sooner than later. However, predictions can be wrong.
2. Can you afford to wait?
An increase in mortgage rates could potentially ease the housing market, adding more properties to the available inventory. By waiting, you may have a broader selection when searching for your next home. Are you willing to take advantage of such an opportunity?
3. How much do you like your neighborhood?
Family-oriented neighborhoods are currently in high demand. If you already live in one, you’re in a favorable position within the market. If you love your community but the properties are expensive, it might be better to renovate your current home.
4. What is your home’s value?
Equity, also referred to as “net value,” is the difference between your property’s market value and its mortgage balance. You can use your equity to finance renovations or put it toward purchasing a new home that better suits your needs. Consult a mortgage professional to weigh the pros and cons based on your accumulated equity.
5. What is your budget?
For a new home: Consider the mortgage amount you can afford while leaving room for other expenses. Do you have money set aside for moving, taxes, notary fees, and other related costs?
For renovating your current home: Generally, renovating the kitchen, bathroom, basement, or flooring offers the most significant return on investment. Factor in the average cost of $200 per square foot for renovations and add 10-15% for contingencies. Also, consider the costs of storing belongings or finding temporary housing during extensive renovations.
6. How much stress can you handle right now?
The pandemic has caused heightened anxiety levels for many people. Renovations or moving can add to the stress. Assess your ability to cope with additional stress and consult with experts, such as a financial advisor or broker, for guidance.
7. Do you have a reliable contractor?
The demand for residential renovations has surged, leading to increased prices and reduced contractor availability. Are you willing to wait for the right contractor, or would you prefer to move?
Consider whether your desired renovations are purely aesthetic. In such cases, you may be able to complete them yourself, reducing the frustration of managing a large construction project.
In conclusion, deciding whether to sell or renovate can be challenging. However, by carefully analyzing all your options and considering the questions above, you can make an informed decision that best suits your needs and lifestyle.
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