in this video we look at how to buy a house if you already own another one and
what are the mortgage implications? That's coming right up.
Welcome to Homebuyer's School brought
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Hi everyone, welcome to another
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so you don't miss anything. So today I'm joined by Mujtaba Syed, manager and
mobile mortgage specialist with TD Canada Trust and the question we're
gonna answer today is can you buy a house when you already--
when you own one already?
Yeah absolutely, but it just depends on your scenario, what you're
looking at doing. Now if you're trying to buy a house and you want to sell your
home, yes you can definitely do that. You could go to your lender and you can
speak to them and say listen I am actually --have listed my property or it's been
listed, I have some pending offers this house is not gonna be sold, I do want to
purchase a new one, a lender can actually factor that in to your qualifications.
They could take a look and say okay if we can get some kind of confirmation or
proof that you have sold your house or there's a pending offer on it or you
will sell your house prior to moving into your new house, we can actually use
that to qualify. That could be just one scenario. Another scenario is if
you decide that hey, you've lived in this house and now you want to turn that into
an investment property or just once turned into a rental property which a
lot of people are doing these days, can you still qualify for a mortgage?
Absolutely you can. You could tell the lender and say listen I am actually
planning on renting this mortgage out, I actually have a future lease in place, I
have someone willing to rent this and I actually want to buy a new house. A
lender at that time can look at that scenario and say listen, can we use the
rents to offset the current obligation, their current mortgage, and would that be
able to help you qualify for your mortgage? It definitely can.
So there's definitely scenarios to take a look at, you don't have to sell your
home and then buy a new home after, you can do at the same time. Once again you
want to talk to the professionals and the specialists you're dealing with at
that time which would be your bank, your lender, your real estate agent, everyone
should be able to be on the same page and they can give you the right advice
at that time but definitely the option's available, you don't have to
wait, or you you can have more than one house at a time.
What happens to your current mortgage from the current house?
Can you-- I don't think you can transfer that mortgage, do you actually
have to qualify for the new house?
Yeah absolutely, so when it comes down to
having your current house right now, all things have portability built into their
mortgages, so when we call portability, what that
just means is that now the we can actually take your mortgage and actually
port it from one property to the other once you sell that property. Now there's
a benefit to portability, you can definitely look at doing that if you
have a great rate right, if you've gotten a rate at that time when your rates were
very low and you've got some great terms on that rate and you want to take that
over, you can actually port that mortgage once you sell your home on to your new
home so you can keep that rate. Portability - there's also a lot of
benefits of portability as well because like I said, if you are in a fixed-rate
and you try to sell your home and you want to break that term, there's
something called penalties, they're called exit penalties, payout penalties and
they could be kind of large they could be depending on what they are at that
time. So a portability option will also save you from paying all your
penalties so if you're gonna sell your house and you want to be moving into
your new house, talk to your lender about portability. Go to your lender you were
dealing with previously or your banker, or your specialist, and advise them
and say listen do I have a portability option? Can I transfer my mortgage from
one property to the other and then work with them to see what they advise for
you to do.
Do you-- when you're planning to buy a new house and you're
planning to port your mortgage over, do you have to take that stress test or the
pre-qualification again or--
Absolutely.
--You do? Okay.
So even if you qualify for a
mortgage for a first-time, you're not a first-time homebuyer per se, anytime you
get a mortgage you do a lending when it comes on to mortgages or secured lending
or what we call it you, have to go through a stress test it's because we want to see
qualifications, situations could have changed and now everyone's subjected to
that so it wouldn't be fair for someone if they-- for a first-time homebuyer at
qualifying stress tests on someone who wasn't a first-time homebuyer so
everyone is on an even playing field, everyone has to. You could be a
first-time home buyer or a tenth time home buyer, if you want to purchase a new
home you have to go through the stress test, what's available for everyone today.
Okay, now how about if you-- let's say you inherit a home right, and you already
have a mortgage, same thing you still have to re-qualify for if you want to
take that mortgage on?
Yeah so that's-- so those situations can be a little
complicated. What I would do-- every scenario is going to be different when
it comes down to like inheritance or being given a house or a gifted house et
cetera, it's all sort of things that you would want to talk to a specialist about
for sure. There might be a stress test here that might not be-- just these are just
not normal situations or not normal scenarios what we call out of the norm,
sit down with your lenders, sit down with a specialist and have the discussion with
them to see how your certain scenario impacts you with the stress test or
without the stress test to see what happens.
Let's say you're using that second
property or your current property and you're going to move into the second one
as a investment property, is it a good idea to actually carry two mortgages?
Once again it really just depends on your financial situation on your
financial application, if you have a rental property if you want to turn one
of your properties into a rental property or investment property, you want
to see how comfortable you are. There's definitely pros and cons of having
investments in real estate like any other investment, there's important cause
to having a rental property so you want to see to see if it kind of meets with
your financial obligations. Maybe sit down with your financial planner, maybe
sit down with someone that can advise you on that path to see if it
makes sense for you-- is there a significant risk for having a rental
property or taking on renters that you could-- that you could take on as well.
That risk could be extra risk for you, if someone's damaging your property
or they haven't paid the rent on time because that rent-- when that mortgage
payment is so an obligation on you so even if someone else doesn't pay on your
behalf you still are-- you still have to pay right, that is a current obligation
for yourself so definitely have the conversation with the financial planner
with someone that you feel like can actually give you the proper advice on
having that and then decide for yourself. I feel like having options
is great and always having-- real estate investments is also a good
option as well but it might not be recommended for yourself.
Perfect. My question for you is
have you ever had-- have you owned another home and tried to
apply for a mortgage? Have you been accepted or declined?
Let us know why or why not in the comment section below.
So Mo, do you have anything else to add?
No I think I think that's pretty much it so
definitely go in, every scenarios going to be different, your scenario's gonna be
different, have the conversation with your lender, have the conversation with
your specialist and work out the best case scenario for yourself.
Perfect. Thank you very much for joining
us and we'll catch you next time.
That's another edition of
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