How much of my Toronto home’s value can I actually put toward my next one?

The real answer is smaller than the price

The amount you can put toward your next home is not your home’s value. It is what is left after the mortgage is paid out, the costs of selling are covered, and the costs of buying the next place are set aside. For most move-up owners, that remaining figure is the number that actually decides what you can do next, and it is usually smaller than the first number people have in their heads.

That gap is not bad news. It is simply the difference between a price and a plan. A sale price is what a buyer pays. Your usable equity is what reaches you after everyone with a claim on that sale has been paid, and after you have reserved what the purchase will cost on top of the price of the next home itself. Seeing it that way turns a vague hope into a figure you can test.

This matters because people tend to start shopping with the larger number. They fall for a listing that only works if every dollar of the sale price arrives intact, and then the real figures arrive and the plan has to shrink. Working out the smaller, honest number first means the homes you look at are homes your plan can carry, and the decisions that follow get much easier. It also keeps the conversation at home calmer.

What gets paid before you see anything

Start with the deductions that come out of the sale itself. You will not know each figure precisely at the start, and that is fine. The goal is to name every item so none of them surprises you later. Write each one down with a rough estimate and a note of who can confirm it. Your lender, your real estate lawyer and your own records cover most of this list. Getting the payout figure in writing is worth the small effort, because it is the largest single deduction for most owners.

• The remaining balance on your mortgage, confirmed by your lender as a payout figure
• Any charge your lender applies for paying the mortgage out before its term ends
• The brokerage commission and any related taxes set out in your listing agreement
• Legal fees for the sale, plus any adjustments your real estate lawyer identifies

Paperwork to gather before any showings

A clear estimate needs real documents, not memory. Pull these together before you book a single showing on the purchase side. Having them in one place lets a lender, a lawyer and Daniel look at the same facts, and it keeps the first conversation focused on your numbers instead of guesses. If a document is missing, the gap itself tells you where to start. It also shows any professional you speak with that you are serious about a plan rather than browsing.

• Your most recent mortgage statement showing the balance, term and renewal date
• The original purchase documents for your current home, including the closing statement
• A list of improvements you have made, with rough dates and receipts if you have them
• Your property tax bill and, for a condo, the current monthly fee notice
• A written note of the price range you are considering for the next home

Buying costs also come out of equity

The second half of the calculation is easy to forget. Buying the next home has its own costs, separate from the price, and they usually draw on the same pool of money as your down payment. Legal fees, title insurance, moving costs, adjustments on closing and inspection fees all belong here. None of them is large enough to ignore when you add them together. Ask your real estate lawyer for a list of the costs they expect on the purchase, so you are working from their list rather than your memory.

The biggest of these for a purchase in the City of Toronto is land transfer tax. A purchase in Toronto carries both a provincial and a municipal land transfer tax, which surprises many people moving up within the city and people arriving from another Ontario city alike. The amount depends on the price and on your circumstances, and the rules change, so use the official Ontario and City of Toronto calculators rather than a figure someone quoted to you.

Once you have estimates for both sides, subtract the buying costs from what the sale leaves you. What remains is the amount you can realistically put down on the next home. Take that figure to a lender, because how much you can borrow on top of it is a lending question, and only a lender can answer it for your situation. If the lender’s answer and the homes you have been browsing do not match, it is far better to learn that now than after an offer.

Why your asking price shapes the plan

Every number above starts with the price your current home actually sells for, and that is where hope tends to creep in. If you build your plan on the price you would like rather than the price recent comparable sales and the home’s condition support, the whole calculation inherits that optimism. The plan looks larger on paper than it will be on closing day. Take a hard look at the condition of your home before you settle on a figure.

A realistic price is not a low price. It is a price grounded in what buyers are actually paying for homes like yours, adjusted honestly for what needs work. A price that sits on the market can lead buyers to wonder why, and a stalled sale puts pressure on the purchase you were hoping to make. Pricing well protects both halves of the move. Ask for the comparable sales behind any suggested price, and ask what about your home would push it up or down.

I would rather show you a smaller, honest number before you shop than watch you fall for a home your sale cannot actually carry.

How the order of moves changes your number

When your equity becomes available depends on whether you sell first, buy first, or try to line the two up. If you sell first, you know your number before you commit to the next home. If you buy first, you are committing before that number is confirmed, and your plan has to account for the gap between the two closings. Neither order is automatically right. Each trades one kind of risk for another.

Some owners bridge that gap with short-term financing from a lender. Whether that is available to you, and what it would cost, is a lending question with an answer specific to your situation. The point here is simpler: decide the order of your moves early, because it determines when your equity is usable and how much certainty you have when you sign on the next home. Write the order you are leaning toward at the top of your one page, so every professional sees it.

Your next step before the first conversation

Before you talk to anyone, put the pieces on one page. Write down your mortgage balance, your rough selling costs, the purchase costs you expect including land transfer tax, and the price range you are considering. Leave blanks where you do not know a figure. The blanks are useful, because they show you exactly which professional to ask first. Keep the page somewhere you can update it as figures arrive.

Then book a conversation with a lender to understand what you can borrow, and with a real estate lawyer if you have questions about the legal costs on either side. If you have an accountant, ask whether anything about the sale of your current home affects your taxes. Each of those people gives the final word on their part of the plan, and none of them can replace the others. Keep their answers together, because one change on the lending side can shift the rest.

For the real estate side, meaning a realistic price for your current home, how to prepare it, and how to sequence the sale and the purchase, bring your one page to Daniel. You do not need every figure filled in. Start with your numbers and the question that feels least clear, and decide what comes first from there. There is no pressure to list or buy on any particular schedule.

This article is general information about selling and buying homes in Toronto and Ontario. It is not legal, estate, tax, lending or inspection advice and does not predict prices or rates or promise results. Confirm estate questions with an estate lawyer, taxes with an accountant, land transfer tax with the official Ontario and City of Toronto calculators, financing with a lender, and condo documents with your lawyer. Daniel Warchow, Sotheby’s International Realty Canada.