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Condo Sales Gives us a $96,000 Option

Condo Sale Gives us a $96,000 Option
By Madhavi Acharya-Tom Yew

After just under three weeks on the market and two failed offers, my husband and I sold our two-bedroom condo in Scarborough for $250,000.


We owe about $129,000 on the mortgage which leaves us with $121,000 in equity.


Related: How home closing costs can add up


After paying the 5 per cent commission and HST ($14,125), the land transfer tax ($7,500), the $950 fee for breaking our mortgage and estimated legal fees of $2,400, we will be left with net proceeds of about $96,000.


Rather than using all of what’s left for a down payment on a house, we’ve decided to consolidate some of our debt – the ones that carry the highest interest rates.  We plan to pay off about $18,000 on a car loan that has an interest rate of 6.8 per cent.


We will also pay off about $15,000 on my line of credit, which has an interest rate of 5.5 per cent.


Marc has about $15,000 with MBNA Canada and Capital One, but he has zero-percent financing. We’ve decided that we won’t bother to pay it off right now because that’s such a good deal.


The downside of consolidating our debt is that it leaves us with about $63,000 to use as a down payment for a house.


In Toronto’s heated housing market, that will not amount to 20 per cent of the value of the purchase price of a home. That means that when we buy a new home, we will be required to buy mortgage loan insurance through Canada Mortgage and Housing Corp. The premiums can be paid up front in a lump sum or blended in with the mortgage payments.


Using less for the down payment means that we will have to borrow more to buy a home, but with interest rates so low, we think this is the right time to consolidate our debt and lock-in an low rate for as long as we can.