Selling your Kawartha Lakes Home – 2. Prepare your finances

selling real estate kawartha lakesChances are, if you’ve lived in your home for more than a few years, you can likely turn a tidy profit. That’s great news. But sealing the deal requires more than just a handshake. You’ll have to consider if now’s a good time to sell? What’s the best way to get the word out? How do you get top dollar for your property? These are just some of the questions that a REALTOR® can help answer.

Still have a way to go paying off your mortgage? Here are some things to consider.

“Discharging” your mortgage

Many people use the proceeds from the sale of their home to “discharge” or pay off their mortgage. If you have what is known as an “open” mortgage, you can pay it all off without any penalties. If you have a “closed” mortgage, be prepared to pay a penalty. The penalty amount will depend on a number of factors, including how much time is left on the term of the mortgage.

If you’re buying a new home, is your mortgage “portable”?

sell real estate in bobcaygeonA “portable” mortgage means you can take your mortgage money with you and buy a new home, without penalty. This can be a real bonus if the interest rate on your mortgage is lower than existing rates! If your new home is more expensive, and requires more mortgage, you’ll have to borrow the extra money at the current market rate.

Maybe the buyer is “assuming” your mortgage

Your mortgage may have a feature that allows the new buyer to take over your mortgage. If the interest rate is lower than existing rates, this can be a very enticing selling feature for your home.

Become a mortgage lender yourself?

If your buyer is having trouble arranging all the money to buy your property, you may consider lending directly to them. This is called a “Vendor Take Back” mortgage, and it’s often used by sellers to help move a property in a slower market. This is an incredibly complicated financial dealing, and you must talk with your REALTOR®, financial advisor and lawyer before choosing this route.

If you find your new dream home before you’ve started to sell your old one

Talk to your existing mortgage lender. You may be able to arrange “Bridge Financing”. This is when your lender (the bank) is confident your existing home will sell quickly, and they agree to lend you the down payment for your new dream home.

Still have a way to go paying off your mortgage? Here are some things to consider.

Capital gains tax

bobcaygeon - find a real estate agentIf the home was your primary residence, you will not have to pay taxes on any capital gain (the increase in the value of your home). If you had tenants living in part of your home, such as the basement, you will pay capital gains tax on a portion of your profits. You may also owe capital gains tax if you’re selling a vacation or investment property. Talk with an accountant to find out what you’ll have to pay.

GST for professional services

Your lawyer and REALTOR® are providing services that are subject to GST/HST.

via howrealtorshelp.ca – Preparing to sell.

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