You can immediately sell your house. It can happen the day after you close on the house and get the keys. Having said that, just because you can doesn't mean you should.
I advise you to think about a few factors before making a choice if you are thinking about it.
Examine your current mortgage contract to see whether there are any restrictions in place. You may be required to pay a fee, known as a prepayment penalty, to end the arrangement if you sell the property soon after buying it and it has a closed mortgage. There are frequently restrictions on when and how much you can pay in extra on your mortgage. The precise sum will depend on the specifics of your mortgage agreement, but it can be significant and often ranges between two and five percent of your loan principal. You might also be required to make additional payments. Administration costs, appraisal costs, and the return of any cash back you may have received from your mortgage lender are a few examples of what may fall under this category.
Significant market swings are uncommon. Although there are occasional ups and downs in the real estate market, it is exceedingly risky to bank on unexpected increases. In general, your odds of selling the house for a much higher price are slim. The only exceptions to this rule would be if you've made significant improvements or if you recently purchased a new construction and the value has increased noticeably.
Most people would probably be wise to review their finances when a five-year mortgage term is over. The seller may be attempting to reduce losses due to a cooling market even though the question is typically about trying to sell for a profit. A real estate agent and financial advisor should be consulted regarding this individual choice.
There are expenses to take into account when selling, just like when buying a home. In addition to paying the fee to terminate your mortgage agreement, you should consider the cost of working with a real estate agent, consulting a lawyer who is licenced to practise real estate law, and any expenses related to staging the home before it goes on the market. All of this can seem very overwhelming, especially if you recently paid a sizable sum of money to close the house and haven't yet accrued much equity.
Be sure to account for capital gains tax as well if you can turn a profit. In Canada, capital gains on investment properties are normally taxed at a rate of 50% of the gain made on the property. The rate is determined by taking into account the original purchase price, the selling price, any selling-related costs, and the seller's income. You might not have to if this is your principal abode, but the tax assessment would take that into account as well.
Having stated that, each seller's situation will be different. Do your homework and take advantage of your agent's knowledge to make the decision that best matches your needs.
If you have a question for Charles about the home buying or selling process, GET IN TOUCH TODAY!