If you read nothing else
- Buying a second home means losing access to the FHSA, the Home Buyers Plan, and first-time buyer tax rebates.
- The mortgage stress test applies again at your new rate. Your previous qualification does not carry forward.
- Bridge financing lets you buy before you sell, but it comes with costs of roughly prime plus 2 to 3 percentage points for 30 to 90 days.
- Whether to sell first or buy first depends on your finances and your tolerance for timing risk. A broker can model both scenarios against your actual numbers.
What You Lose Access To
When you buy a second home, several first-time buyer tools are no longer available.
The First Home Savings Account eligibility ends once you have purchased a qualifying first home. The lifetime contribution limit is $40,000 per person. That account is closed to you now.
The Home Buyers Plan, which allows you to withdraw up to $60,000 from your RRSP, is also no longer available for a second purchase.
If you are in Ontario, the Land Transfer Tax refund is gone. That refund removes land transfer tax entirely on the first $368,000 of a purchase price. The New Home HST Rebate, which eliminates the provincial portion of HST for first-time buyers on qualified new builds, is also no longer available.
What You Still Have
Your equity. Using the equity in your current home as a down payment lets you fund a new purchase without selling first. You borrow against that equity through a bridge loan and use the funds to secure the new property.
A bridge loan is a short-term loan that covers the gap between your new home closing date and the proceeds from your current home sale arriving. Bridge financing in Canada typically runs at the Bank of Canada prime rate, currently 4.45%, plus 2 to 3 percentage points in interest, for 30 to 90 days.
A $200,000 bridge loan for 60 days at current rates costs approximately $12,900 at the lower end.
The Stress Test Applies Again
Many move-up buyers assume their existing mortgage qualification carries forward. It does not. The stress test applies again at your new rate.
A buyer whose current mortgage was at 2.1% will stress test at 6.5% for a new mortgage at 4.5%. On a $700,000 purchase, that requires a household income of approximately $90,000. Many move-up buyers qualify for less than they expect. Knowing this before you list your current home or make an offer on the next one changes the conversation significantly.
$155,000
Approximate household income required to qualify for a $700,000 mortgage at today's stress test rate.
Should You Sell First or Buy First?
There is no universal answer. It depends on your financial situation and your tolerance for timing risk.
| Sell First | Buy First | |
|---|---|---|
| Upside | No bridge financing cost. Proceeds go directly to the next purchase. | Certainty on the new property. No deadline pressure on the sale. |
| Downside | May have no home to move into. Average rental cost is $1,382 per month for a one-bedroom while you wait. | Bridge financing costs roughly prime plus 2 to 3 percentage points for 30 to 90 days. |
| Best for | Buyers who want to eliminate timing risk and can tolerate temporary rental costs. | Buyers who need certainty on the next home and have strong enough finances to carry both properties briefly. |
Before you list or make an offer, run both calculations. The affordability calculator and refinance calculator on financecanada.ca show you your net proceeds and your new qualifying amount. Knowing those two numbers before you move puts you in control of the timeline.
When to Talk to a Mortgage Broker
A broker can run your specific numbers against both scenarios, selling first and buying first, and show you the real cost difference. They can also confirm your current qualifying amount under the new stress test before you make any commitments. That conversation should happen before you list your home or make an offer, not after.
Frequently asked questions
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