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The Move-Up Decision: Can You Sell Your Current Home and Buy a More Expensive One?

How to calculate whether you can afford to move up to a bigger home in Canada — using your current equity as a down payment and qualifying for a larger mortgage.

The Move-Up Decision: Can You Sell Your Current Home and Buy a More Expensive One?

Moving up to a larger or more expensive home is one of the most financially complex decisions Canadian homeowners make. You're simultaneously unwinding an existing mortgage, extracting equity, and qualifying for a new (larger) loan — often with a bridge period in between.

Step 1: Calculate Your Available Equity

Net Equity = Estimated Sale Price − Mortgage Payoff − Selling Costs

Selling costs include commission (3.5%–5% + HST), legal fees, and any prepayment penalty for breaking your mortgage early.

Example:

  • Current home estimated value: $700,000
  • Mortgage balance: $380,000
  • Estimated selling costs: $35,000
  • Net equity (down payment on next home): $285,000

Step 2: Determine Your New Maximum Purchase Price

Take your net equity as the down payment on the new property. Apply the stress test at your qualifying rate and your income to determine the maximum mortgage. Add equity to the mortgage to get your price ceiling.

Step 3: Bridge Financing

If you're buying before your current home closes, you'll need bridge financing — a short-term loan from your lender to cover the gap. Bridge loans are typically available for 30–90 days and are secured against your existing home's equity. Rates are higher than mortgage rates, but the cost for a short bridge is usually modest.

Not all lenders offer bridge financing. Confirm availability before signing an unconditional offer.

Timing Strategies

Sell first, then buy — Lower risk. You know exactly what you have before committing. Downside: you may need temporary housing between closings.

Buy first, then sell — More stressful. Requires bridge financing and means you're carrying two properties briefly. In slow markets, this is risky.

Coordinate completions — Negotiate both transactions to close on the same day or with a short overlap. Requires careful coordination but eliminates bridge risk.

Tax Considerations

Your principal residence gain is tax-free under the Principal Residence Exemption. You can only designate one property as your principal residence per tax year, which matters if you own multiple properties.

Try the Calculator

→ Move-Up Calculator

Official Resources