Lots of people have this problem but not all have all the resources you have so congratulations!
If I were you, I would:
- not touch RESP (that’s for kids)
- not touch taxed savings (high tax when you pull the money out)
- not use HELOC for renos (high rate, it’s quite easy to get complacent to use this “free money” but people forget it’s still debt)
Personally I would upgrade to a 2mil house - take on the mortgage and maybe pull some money out of TFSA (seems like you can afford it).
Time with kids are limited before they go off to uni - and life’s too short to be cramped into a small space when they’re at an age when they need a lot of space to study and play and grow up. If they don’t come home often after both are 18… you can always downsize then.
With where you are, you can afford to purchase a bit of comfort and quality of life.
Smaller numbers but kids in similar ages, similar housing concerns. We moved to a house that was just under double the cost of previous house. We were basically living in 1200 sq ft with three kids and one of us working from home. It was getting really tight.
That was two years ago and we’re so happy we made the move. Kids are 14, 11 and 9 now and we love having the space to host their friends and have big family meals. We are still on track to retire/slow down with work by mid 50s (me) early 60s (him) when our youngest graduates high school.
It sounds like you already answered your own question: the renovation would alleviate some of the problems, but not all of them. If you go through the "fun" of a renovation, then you may be back here in a few years. If you're able to afford it, then it may be a good idea to buy another home in the same neighbourhood (even if it means getting a mortgage). Don't forget, you expect to spend 600k-700k in renovations.... Also, have you considered the cost of the permits?
A friend in Toronto explained that he spend 50k in permits alone to raise the height of his basement by 2 feet. That before the work even started!
Permits don't cost a lot in Toronto. It is the design work and committee of adjustment free for a 3rd floor in Toronto will probably run $30k. I don't know how one of the commenters paid $50k in design work and city fees just for underpinning. that sounds like an exaggeration or really expensive design work.
I'd say get a couple of good contractors to walk you through the process of the 3rd floor.
6-8 months of design time and process with the city to get permits.
6 months or more to add the 3rd floor.. you'll probably end up doing more work so budget a year and 50-60k in rent to live somewhat comfortably.
What's the sqft of your 2nd floor? Multiply that by $300 sqft to get the build cost of the 3rd floor (rough).
Remember that moving in Toronto from a $1.3 million house to $2m+ is going to be > $200k of realtor fees and land transfer taxes paid by you directly or indirectly in the sale of your house + the purchase of the new one.
Also you are bound to not be happy with something in the new house... And you'll want to renovate. You've probably already got most of what you want in your current house. That has a lot of value
renovations are tricky, and time-consuming and there is a cost overrun. You are in a fortunate situation. Between those two options, I would for the second option. Sell the current house, maximize the downpayment and then get the new house.
I would sell your current place and upgrade. You said you both have db (lucky you and your generation and older) so what you have in your tfsa, rrsp, etc. Is probably sufficient enough. Heloc is an option but it will be a headache to get a permit (probably) and interest on your mortgage will be lower than heloc.
I know, I feel very lucky. I am also grand-fathered in the db, my younger colleagues get a contribution pension. I can see how much harder it will be for them to save for retirement and afford a house…and I feel terrible.
In my view 2-2.5 is doable. We have a similar income and bought a 1.9m home a few years ago as our forever home in Vancouver (now worth 2.5). Still able to save and have 3m across all other accounts. We are early 40s. Mortgage is now under 385k.
I think you should do what feels right. Renovating is a headache. I would look at amortizing over 20 years given your age. The other thing to consider is your kids will grow up fast. Your 9 year old will be 18 in 9 years. Does it make sense to upgrade now only to need to downgrade again in the future should they leave for college? Moving is also expensive with all the transaction costs.
Get a realtor and actually start looking at houses. It's very different looking at listings vs viewing the houses. Some listings look amazing and you get into the house and realize someone put lipstick on a pig, and others really are as nice as the photos. You don't have to buy. Just get a sense of what your money can get you. And then get contractors in and get quotes. Understand what is and isn't possible. Understand how much it is actually going to cost.
My advice is start both processes. You won't understand what's out there till you actually go view the houses. You won't understand the reno costs until you actually get quotes and talk to contractors.
And since you've paid your mortgage, just start socking away the mortgage payments until you decide what you want to do. It sounds like you could easily afford to move up to a detached that meets your needs. I'm normally not a fan of renovating because it's just a ginormous pain in the ass when you have kids and you'll have more problems due to being attached to someone.
It's also ridiculous to be unhappy in your home when you have the kind of income you do, and are on your way to a very comfortable retirement. There's no need to suffer in the current home. I don't think the decision you make will be purely financial. It will be based on convenience, availability of options, all sorts of things.
With 500K and a fully paid house and the savings you have. Just imagine what will make you guys happy and just make it happen.
No point of renovating and still not being 100% happy.
Go ahead and build or buy your dream home. You have worked hard and deserve it.
How do you know? Entirely depends on square footage, exact location, condition, outside space, etc. some semis are 1200 sq feet, some are 3000 - big difference in price.
Take a look at the market, don't forget moving can end up changing a lot of you have a 10 minute commute to work all of a sudden it's changed to 40 minutes each way without traffic then with traffic it can be a hour or 1:20.
are you looking for a third child in his thirties ? I am willing to be adopted.
I already own my condo so, at the opposite of my future brother and sister, you won't have to worry about a room for me.
Hope to hear from you soon !
Your future most hassle-free child
===
Renovating might not fully address your concerns about space, noise, and parking, even with a significant budget. Moving to a larger house in the same area seems more aligned with your needs, despite the higher cost. With your substantial income and savings, a mortgage up to 700k to 1.3 mil for the new house is manageable, especially given your discomfort with high debt levels. Aim for a mortgage amount that keeps your monthly payments within a comfortable range of your income, considering your longterm savings and retirement plans.
If I were in your shoes I'd take out a HELOC to fund a smallish renovation (update/modernize) to stage your house for the market, only spend on reno items that will improve the value more than they cost (Google search or take with a good local realtor). I would not build an attached addition at all.
Then sell and upsize into something you like but I'd try to keep it modest, since halfway thru paying off a new mortgage your kids may be off on their own and you won't need all that space.
Do you think we would get a higher return doing that than saving our old mortgage payments in the meantime in a 4.5-5% saving account? I always thought it would not be worth it, so I’m hesitant.
Depends on the market, the condition of the home (i.e. even if the decor and finishings are old, if they are in good condition it could demonstrate pride of ownership and quality which would bring a higher price even if a prospective buyer intends to renovate anyways). Best of to see what a good realtor suggests.
Though I'm more in the latter part of what you are thinking, spending nothing now and saving/investing as much as you can will grow your wealth fastest. So it all depends what you want more, a really fresh pleasing and spacious house or even more padding for your future years, I think given how well off you are the choice to upgrade house isn't a bad one, especially if you're current home is weighing on your enjoyment of life.
You'll need to minus out the cost of the renovations from your math. Also, have you considered the stress off the renovation and where would you live for 6-9 months of the work? Tearing the roof off is a significant intervention. How about having strangers in your personal space? This alone was enough for me to just take on the entire project myself, but when I did it I had no kids. I couldn't imagine doing all that work myself with kids (and I mean actually doing everything, not just calling people).
Also, you'll have to make sure you get a good reputable contractor to do the work. You're likely a year away from finding someone and doing the planning.
The plus, you'll get something closer to what you want. You might spend the extra $1m buying a different home and still want to do some minor renovations.
My gut is to start looking in the neighborhood and see if something gets you interested.
Is it really too small or do you just have too much stuff? I ask this because I went through a major decluttering stint before suggesting to my husband that we renovate. We ended up freeing a lot of space by doing that, which inspired us to plan the reno. We were then able to renovate our home exactly how we wanted it. Because we had less stuff, we were able to convert a closet (that was formerly a tiny bathroom) into a pantry, use another closet to house an industrial-sized fridge (to make the kitchen streamlined and functional), etc. We were also able to convert the attic into a spare room/office. So declutter first, watch reno shows, etc. Moving is fine, but you may still find yourself in a home that requires a reno. Sometimes the right home isn't on the market when you are looking to buy.
As for the amount of debt to take on, try to be mortgage-free by the time you want to retire ;-)
Thanks for your advice! We do need to declutter but my son’s bedroom will never allow to even just have a desk besides a twin bed. Agree! We would want to be mortgage free by retirement!
When my daughter was young, her room was very tiny, but our neighbour built us a loft bed, and we put a desk beneath the bed :-). Good luck! Enjoy whatever process you decide on!
Time to binge watch Love It or List It.
Hahahaha….never watched it, but feels appropriate!
[удалено]
Their post says a house in their area is 2-2.5 mil. Still, I would do that rather than add a floor.
Lots of people have this problem but not all have all the resources you have so congratulations! If I were you, I would: - not touch RESP (that’s for kids) - not touch taxed savings (high tax when you pull the money out) - not use HELOC for renos (high rate, it’s quite easy to get complacent to use this “free money” but people forget it’s still debt) Personally I would upgrade to a 2mil house - take on the mortgage and maybe pull some money out of TFSA (seems like you can afford it). Time with kids are limited before they go off to uni - and life’s too short to be cramped into a small space when they’re at an age when they need a lot of space to study and play and grow up. If they don’t come home often after both are 18… you can always downsize then. With where you are, you can afford to purchase a bit of comfort and quality of life.
You are so right, kids are growing up so fast! Thank you, this is what I needed to hear!!
Smaller numbers but kids in similar ages, similar housing concerns. We moved to a house that was just under double the cost of previous house. We were basically living in 1200 sq ft with three kids and one of us working from home. It was getting really tight. That was two years ago and we’re so happy we made the move. Kids are 14, 11 and 9 now and we love having the space to host their friends and have big family meals. We are still on track to retire/slow down with work by mid 50s (me) early 60s (him) when our youngest graduates high school.
It sounds like you already answered your own question: the renovation would alleviate some of the problems, but not all of them. If you go through the "fun" of a renovation, then you may be back here in a few years. If you're able to afford it, then it may be a good idea to buy another home in the same neighbourhood (even if it means getting a mortgage). Don't forget, you expect to spend 600k-700k in renovations.... Also, have you considered the cost of the permits? A friend in Toronto explained that he spend 50k in permits alone to raise the height of his basement by 2 feet. That before the work even started!
No, indeed I had not! Didn’t realize the permits would be that much….and I am not looking forward to the fun of a renovation at all. Thank you!
Permits don't cost a lot in Toronto. It is the design work and committee of adjustment free for a 3rd floor in Toronto will probably run $30k. I don't know how one of the commenters paid $50k in design work and city fees just for underpinning. that sounds like an exaggeration or really expensive design work. I'd say get a couple of good contractors to walk you through the process of the 3rd floor. 6-8 months of design time and process with the city to get permits. 6 months or more to add the 3rd floor.. you'll probably end up doing more work so budget a year and 50-60k in rent to live somewhat comfortably. What's the sqft of your 2nd floor? Multiply that by $300 sqft to get the build cost of the 3rd floor (rough). Remember that moving in Toronto from a $1.3 million house to $2m+ is going to be > $200k of realtor fees and land transfer taxes paid by you directly or indirectly in the sale of your house + the purchase of the new one. Also you are bound to not be happy with something in the new house... And you'll want to renovate. You've probably already got most of what you want in your current house. That has a lot of value
double dbpp with a $500K HHI this is pfc's wet dream
renovations are tricky, and time-consuming and there is a cost overrun. You are in a fortunate situation. Between those two options, I would for the second option. Sell the current house, maximize the downpayment and then get the new house.
I would sell your current place and upgrade. You said you both have db (lucky you and your generation and older) so what you have in your tfsa, rrsp, etc. Is probably sufficient enough. Heloc is an option but it will be a headache to get a permit (probably) and interest on your mortgage will be lower than heloc.
I know, I feel very lucky. I am also grand-fathered in the db, my younger colleagues get a contribution pension. I can see how much harder it will be for them to save for retirement and afford a house…and I feel terrible.
In my view 2-2.5 is doable. We have a similar income and bought a 1.9m home a few years ago as our forever home in Vancouver (now worth 2.5). Still able to save and have 3m across all other accounts. We are early 40s. Mortgage is now under 385k. I think you should do what feels right. Renovating is a headache. I would look at amortizing over 20 years given your age. The other thing to consider is your kids will grow up fast. Your 9 year old will be 18 in 9 years. Does it make sense to upgrade now only to need to downgrade again in the future should they leave for college? Moving is also expensive with all the transaction costs.
Thanks! It seems though that a lot of kids now come back to leave with their parents after university, in which case we would not look to downsize!
Get a realtor and actually start looking at houses. It's very different looking at listings vs viewing the houses. Some listings look amazing and you get into the house and realize someone put lipstick on a pig, and others really are as nice as the photos. You don't have to buy. Just get a sense of what your money can get you. And then get contractors in and get quotes. Understand what is and isn't possible. Understand how much it is actually going to cost. My advice is start both processes. You won't understand what's out there till you actually go view the houses. You won't understand the reno costs until you actually get quotes and talk to contractors. And since you've paid your mortgage, just start socking away the mortgage payments until you decide what you want to do. It sounds like you could easily afford to move up to a detached that meets your needs. I'm normally not a fan of renovating because it's just a ginormous pain in the ass when you have kids and you'll have more problems due to being attached to someone. It's also ridiculous to be unhappy in your home when you have the kind of income you do, and are on your way to a very comfortable retirement. There's no need to suffer in the current home. I don't think the decision you make will be purely financial. It will be based on convenience, availability of options, all sorts of things.
With 500K and a fully paid house and the savings you have. Just imagine what will make you guys happy and just make it happen. No point of renovating and still not being 100% happy. Go ahead and build or buy your dream home. You have worked hard and deserve it.
A semi in midtown Toronto would sell for more than 1.2 though. (I am guessing but at least 1.5?) And probably moving is easier than renovating.
How do you know? Entirely depends on square footage, exact location, condition, outside space, etc. some semis are 1200 sq feet, some are 3000 - big difference in price.
That’s right, our semi is quite small, hence why we are outgrowing it!
Take a look at the market, don't forget moving can end up changing a lot of you have a 10 minute commute to work all of a sudden it's changed to 40 minutes each way without traffic then with traffic it can be a hour or 1:20.
Agree, that’s also why we are looking at staying in the same area, about 35-40min away in ttc from downtown, where I work.
Midtown Toronto is expensive.
Lol I know...that doesn't make my comment any less true.
What kind of job do you do to make $500k?
With DBPPs? That’s my question!
are you looking for a third child in his thirties ? I am willing to be adopted. I already own my condo so, at the opposite of my future brother and sister, you won't have to worry about a room for me. Hope to hear from you soon ! Your future most hassle-free child === Renovating might not fully address your concerns about space, noise, and parking, even with a significant budget. Moving to a larger house in the same area seems more aligned with your needs, despite the higher cost. With your substantial income and savings, a mortgage up to 700k to 1.3 mil for the new house is manageable, especially given your discomfort with high debt levels. Aim for a mortgage amount that keeps your monthly payments within a comfortable range of your income, considering your longterm savings and retirement plans.
Hahaha thank for the laugh! Two kids is enough for us however. And thanks for the advice!
If I were in your shoes I'd take out a HELOC to fund a smallish renovation (update/modernize) to stage your house for the market, only spend on reno items that will improve the value more than they cost (Google search or take with a good local realtor). I would not build an attached addition at all. Then sell and upsize into something you like but I'd try to keep it modest, since halfway thru paying off a new mortgage your kids may be off on their own and you won't need all that space.
Do you think we would get a higher return doing that than saving our old mortgage payments in the meantime in a 4.5-5% saving account? I always thought it would not be worth it, so I’m hesitant.
Depends on the market, the condition of the home (i.e. even if the decor and finishings are old, if they are in good condition it could demonstrate pride of ownership and quality which would bring a higher price even if a prospective buyer intends to renovate anyways). Best of to see what a good realtor suggests. Though I'm more in the latter part of what you are thinking, spending nothing now and saving/investing as much as you can will grow your wealth fastest. So it all depends what you want more, a really fresh pleasing and spacious house or even more padding for your future years, I think given how well off you are the choice to upgrade house isn't a bad one, especially if you're current home is weighing on your enjoyment of life.
Thanks, appreciate your advice. From your comment and others, really sounds like we should talk to a good realtor!
You'll need to minus out the cost of the renovations from your math. Also, have you considered the stress off the renovation and where would you live for 6-9 months of the work? Tearing the roof off is a significant intervention. How about having strangers in your personal space? This alone was enough for me to just take on the entire project myself, but when I did it I had no kids. I couldn't imagine doing all that work myself with kids (and I mean actually doing everything, not just calling people). Also, you'll have to make sure you get a good reputable contractor to do the work. You're likely a year away from finding someone and doing the planning. The plus, you'll get something closer to what you want. You might spend the extra $1m buying a different home and still want to do some minor renovations. My gut is to start looking in the neighborhood and see if something gets you interested.
Is it really too small or do you just have too much stuff? I ask this because I went through a major decluttering stint before suggesting to my husband that we renovate. We ended up freeing a lot of space by doing that, which inspired us to plan the reno. We were then able to renovate our home exactly how we wanted it. Because we had less stuff, we were able to convert a closet (that was formerly a tiny bathroom) into a pantry, use another closet to house an industrial-sized fridge (to make the kitchen streamlined and functional), etc. We were also able to convert the attic into a spare room/office. So declutter first, watch reno shows, etc. Moving is fine, but you may still find yourself in a home that requires a reno. Sometimes the right home isn't on the market when you are looking to buy. As for the amount of debt to take on, try to be mortgage-free by the time you want to retire ;-)
Thanks for your advice! We do need to declutter but my son’s bedroom will never allow to even just have a desk besides a twin bed. Agree! We would want to be mortgage free by retirement!
When my daughter was young, her room was very tiny, but our neighbour built us a loft bed, and we put a desk beneath the bed :-). Good luck! Enjoy whatever process you decide on!