| blkgsr | 05-22-2024 09:59 AM |
Quote:
Originally Posted by lowside67
(Post 9136901)
There are a couple things to consider.
If we figure your current house is worth $1.5M and your new house is going to be purchased (and we assume will appraise) for $1.8M, then the total value of both homes will be $3.3M. You'll need your existing $150k mortgage plus $1.8M for the new house, so a total loan required of $1.95M. $1.95M versus $3.3M is a loan to value of approx 60% which is totally achievable, and you can push this a bit higher, easily 65%.
However, the bigger question, is can you actually qualify to keep your house and buy the new one, without rental income while you are living in your old house and renovating your new?
Qualifying rate on a $1.95M mortgage is approx 7% right now for a fixed mortgage, though the actual rate will be lower when you buy the place. $1.95M mortgage, 7%, 30-year am = approx $13,000 monthly payment or $156,000 annually.
If you have no other debts, you will need to prove and declare approximately $350k in annual income on your and your wife's tax return to be conventionally approved on this.
If you meet this hurdle, I'd say this is a totally doable plan to keep your current place while you renovate the new one (as long as you can actually swing this payment).
The next question is once the new place is done and you move in, do you keep and rent or sell the current house? If you figure that you can only get $4,000 per month for your house or sell it and get $1.5M+, that's an EASY decision, you sell it. Receiving rent of $48k per year is the equivalent of a 3% rate of return on your $1.5M tied up. You could literally go buy GICs with 0 risk and get more like 5%, and options go up from there. But frankly there are a lot more components to consider than you can cover on one post here, and you might want to have a conversation with your advisor on this one.
-Mark
| ya i was running some numbers yesterday and they are brutal for sure. i'd save over $2000/month if could get this all at my current 2.39% but the low 5% numbers are scary for sure.
I/we can make the numbers to get approve, but do we want to is the real question.
what really pisses me off when running the $2M mortgage calculations is the almost 50/50 split of principal and interest. roughly $250K each. that's brutal. Quote:
Originally Posted by Hehe
(Post 9136927)
YVR's property return (by renting) has been shit the last decade or two. It makes 0 sense to keep it for rental purposes. The idea of potential developmental opportunities... either you wait until an offer comes for land assembly or forget about it. The pricing in your area, if land assembly is getting momentum, then most of the profit to be made are priced in. You aren't missing much unless someone really comes knocking with a land assembly deal.
My suggestion would be, assuming you have no problem servicing the debt of 1.8M, sell the existing place, use a good chunk (say 800k) of that money to buy some US T-bill or whatever. You can do 5% return without almost 0 risk, highly liquid (if whatever opportunity comes around) and if BoC drops the rate before FED does, expect CAD goes poop in short term. And the remaining goes as the fat downpayment to your new place.
| financially you are correct, this makes way more sense.
wouldn't you say if i sell the house to just use it all (minus say $200K for reno or slush) and throw it all on the new house?
unless i can get a higher return on a sperate investment wouldn't it make sense to just pay more on the house?
also would i not then have to pay capital gains on the new investment (unless it's TFSA which is maxed out) or put in RRSP and leave it?
the real problem here is the emotional connection with the house. first one, spent more time and effort than i can recall fixing it up, been there 14 years. started family etc etc. guess i really just need to put my big boy pants on and move on from it. | 