Buy First or Sell First? How to Decide in the GTA

There's no rule that says which comes first. Selling first gives certainty and no bridge financing. Buying first means carrying two properties, and any new mortgage on the second home still has to clear Canada's stress test, the greater of your rate plus 2 percent or 5.25 percent.

Selling first gives you a firm number to work with and no risk of owning two homes at once. Buying first means you are not rushed into accepting a weak offer, but you need a plan, and usually a lender's help, for carrying both properties until the sale closes. Neither is wrong. The right order depends on how much certainty you need, how comfortable you are carrying two mortgages for a few weeks, and what the market is doing right now.

Is there a right answer?

No. Nothing in Ontario's real estate rules requires one order over the other, and no regulator sets a rule about it. It is a personal risk decision, and it depends on your equity, your income, your comfort with uncertainty and how quickly homes are moving in your neighbourhood right now. What follows is the mechanics of each path, so the decision is informed rather than guessed at.

What changes if you sell first?

You know exactly what you have to spend on the next home, because your sale is firm and the proceeds are a real number rather than an estimate. You carry no risk of owning two properties, and you do not need bridge financing. The trade off is timing. If you have not found your next home by the time your sale closes, you may need to rent short term, arrange a longer closing with the buyer, or ask your buyer for a rent back so you can stay in the home for a set period after closing. All three of those have to be negotiated into the deal, not assumed.

What changes if you buy first?

You are not pressured into taking a weak offer just because a closing date is coming. You move once instead of twice. The cost is that you need to be able to carry two properties, at least on paper, until your current home closes, and most lenders will want to see how you plan to do that. If your current home has not sold by the time your purchase closes, you will usually need bridge financing to cover the gap.

What is bridge financing, and does it still need to pass the stress test?

Bridge financing is short term financing, usually arranged through your existing mortgage lender, that covers the gap between your purchase closing and your sale closing. It is normally secured against the equity in your current home, and most lenders will only offer it once you have a firm sale agreement in hand, not just a listing.

Bridge financing itself is a lender product, and the rate, fee and term are set by whichever lender is issuing it, so ask your own lender for those numbers rather than assuming a figure. What does have a fixed floor is any new mortgage you take out on the new property while you still own the old one. Federally regulated lenders have to qualify that mortgage under Canada's stress test, which requires it to be able to carry at the greater of your contract rate plus 2 percentage points, or 5.25 percent, whichever is higher, under the Office of the Superintendent of Financial Institutions' Guideline B-20. That floor applies whether you are buying first or selling first, and it does not change based on which order you choose.

Will a seller accept an offer that depends on your home selling?

Sometimes, and usually only with a condition attached that protects them. An offer that says you will buy only if your current home sells is called a sale of buyer's property condition, and most sellers who accept one also keep what is known as an escape clause. That lets the seller keep showing the property and accept a second offer if one comes in. The Real Estate Council of Ontario, which regulates how these conditions work, describes a typical version: the seller notifies you in writing that a second offer has come in, and gives you a set window, 48 hours is the example RECO uses, to either waive your condition and commit to the purchase or let the deal end. If you cannot remove the condition in that window, your agreement becomes void and the seller can move ahead with the other buyer. If you do waive it in time, you keep the right to buy on your original terms even if the second offer was better.

In a market where homes are taking longer to sell, sellers are less likely to accept a sale of buyer's property condition at all, because it puts their own plans on hold. That is one more reason sellers often favour buyers who have already sold, or who do not need the condition.

What happens if your home doesn't sell before your purchase closes?

This is the scenario the whole decision is really about. If you have committed to a purchase and your current home has not sold or closed by then, you need another way to fund the gap, which usually means bridge financing if your lender will offer it, or carrying both mortgages until the sale closes. If neither is possible, you risk being unable to close on the purchase, which can put your deposit at risk under the terms of your agreement. This is why most lenders want to see a firm, unconditional sale before they will approve bridge financing, and why buying first without one already lined up is the riskier of the two paths.

So which should you do?

Selling first is the safer order for most people, because it removes the risk of carrying two properties and gives you a firm number to plan around. Buying first can make sense if your equity and income comfortably support carrying both for a few weeks, if you have a strong sense your home will sell quickly, or if you have found a home you do not want to risk losing. Either way, run the numbers on both sides of the move before you commit to an order. Our trade up or downsize calculator puts your proceeds from the sale and the closing costs on the purchase in one place, and our cash to close calculator shows what you need on hand if the two closings do not land on the same day.