Is it better to trade up to a bigger, better home – with a bigger, but not necessarily better mortgage – or to use a second mortgage to improve your own home’s livability and increase its value with so-called “sweat equity” or by contracting for the improvements you want?
A straw-poll may be no more accurate than wetting one’s finger and holding it up to find out which way the wind blows. That being said, a straw-poll taken by the Globe and Mail, at the time this article was written, indicates that it is better to be a buyer than a seller in this real estate market.
63% of respondents to the Globe’s poll indicated they would rather be a buyer in today’s market, while 37% would prefer selling. With this admittedly unscientific reading on the market, the uncertainty of which position to take suggests that, perhaps, in these decidedly uncertain economic times, homeowners may be better advised to improve their existing homes via a second mortgage than to trade up irrevocably to a bigger house – and bigger mortgage.
With both Royal Bank and Bank of Montreal having recently announced cuts to their five-year fixed rate mortgages, now may in fact be the time to trade up. On the other hand, if you are among the 63% of poll respondents who think it is a buyers market, it may be worth consulting your mortgage broker to see which way the wind is blowing – and to see what kind of deals are available on second mortgages.
