Should you stay or should you go: One of homeowners’ toughest decisions

This past year has seen many of our daily routines with family, friends and work turned upside down. Our homes have taken on an increased number of functions – it’s now also become a school, office and gym.

With our homes being used in so many ways, many homeowners are wondering whether now is the time to renovate their living space to meet their new needs, or whether it’s time to look for a new home to accommodate their family’s additional living requirements. Ultimately, since we are spending much more time at home, we simply want our homes to be as comfortable as possible so that we can enjoy our time there.

Before you start on the path to renovating or moving, we’ve outlined some financial considerations to keep in mind.

Since your home is likely your biggest asset, renovations can be a great way to increase your property value while making daily living more comfortable and enjoyable.

Before you start tearing down walls, think about the cost to renovate and consider these questions:

• What type of renovation are you taking on – is it small or major?
• How much money do you think you’ll need – will the cost put a strain on your finances?
• Will you need funds up front or in stages as the job progresses?
• How long do you anticipate it will take to pay off any debt you accumulate? – it may be helpful to create a proposed repayment schedule.

If you’re thinking about renovating your home, make an appointment with a Scotiabank Home Financing Advisor to discuss cost-effective options to finance your renovations. Solutions like the Scotia Total Equity Plan® (STEP) lets you mix and match Scotiabank credit products to meet your borrowing needs, all with one easy application.¹ 

There are many reasons you may want to move to a new home. Perhaps your family is growing or your children have left home and you no longer require as much space. Maybe the value of your home has risen, enabling you to consider a larger home, a better location or a house with more perks.

A major item for consideration is your current mortgage situation: 

If the answer is “yes” and you decide to downsize, you could continue to be mortgage free and most likely reduce your overall housing costs. In addition, if you have money left over from the sale of your home, you can decide whether you may want to direct funds to other priorities, like saving for retirement or lending a helping hand to your children or another loved one.

If your current family situation requires you to move to a larger home – depending on the location of your new home – you could either continue to be mortgage free or you may need to take on a new mortgage. Review your financial plan with your advisor and determine if you can easily take on a mortgage and still meet your other financial goals.

If the answer is yes, you may be able to “port” your existing mortgage to the new home. “Porting” your mortgage means that you take your existing mortgage – along with its current interest rate and terms – from your current home to your new home. If you find, however, that you could get a lower interest rate, determine if it makes financial sense to pay the penalty for leaving your existing mortgage and applying for a new mortgage.

After doing your calculations, you may decide it makes sense financially to delay your move until the end of your mortgage term, or until you’ve built up more equity in your home.

Whether you currently hold a mortgage with Scotiabank or your mortgage is with another financial institution, a Scotiabank Home Financing Advisor can help review your options and recommend a borrowing solution to help you achieve your homeownership goals. 

The Scotia Total Equity Plan® (STEP) is a flexible borrowing plan tied to the equity in your home.¹

Whether it’s a new home, renovation, your child’s education, consolidating debt or preparing for the unexpected, STEP offers you access to your home’s equity through Scotiabank credit products (like mortgages and lines of credits) to help you achieve your long- and short-term financial goals.

All it takes is one application to access all the products and benefits under STEP. You can initially borrow up to 80% of the value of your home, including up to 65% for line of credit products.²

You can also set up the STEP Automatic Credit Limit Increase feature. This feature automatically increases the credit limit on a selected ScotiaLine® Personal Line of Credit when you pay down the principal of your mortgage. Even when you are mortgage-free, you can continue to access your home equity with STEP.

This article originally appeared in Advice Matters.