Should you buy or sell first?
Deciding whether to buy or sell first is not an easy decision; there are pros and cons to each option.
If you buy a new home first, you can eliminate anxiety about where you’ll live next, although the worry may be how long it will take your current home to sell. Selling first relieves you of the financial burden of owning two homes. The challenge then becomes finding a new home within a given time frame.
If you can’t find a replacement home in time, moving to a rental property in the interim may be the only option.
Your financial situation will most likely determine whether you can buy first, or must sell first. We are happy to have a chat with you to see what your options are for example, if you have enough in savings to cover a deposit and costs on a new property, you may qualify for the finance you need without having to sell your current home.
If you don’t have enough cash to make the move, your mortgage provider may be able to lend you enough cash for a deposit or arrange bridging finance. A ‘bridging’ loan is a short-term loan which can be utilised to cover the financial gap that can occur when a buyer finds the home he or she wants to purchase before their existing home is sold. These types of loans usually incur a higher rate of interest than other loans, but can tide the buyer over for up to 12 months until the other property is sold.
The second thing to do is talk with your real estate agent
Ask about market conditions in your area. Find out approximately how long it will take to sell your current home. Ask if homes like yours are selling quickly or, is there a lot of competition?
It’s also worth asking if you can sell with an option to rent back your home from the buyers for a period of time. This will give you additional time to find a home to buy if you haven’t found one by the time settlement arrives.
On the buying side, you’ll want to know if there is an abundance of property currently on the market or if properties are scarce.
Even though you’d probably rather not move to a rental property between selling and buying, it’s worth finding out how much it would cost if you had to take this route. Ask your agent if there are plenty of homes for rent in the area where you want to live? Also check the cost of storage in case you need to store some of your possessions temporarily.
Finally, consider your tolerance for risk and uncertainty. If you buy first and your current home doesn’t sell quickly, can you afford – financially and emotionally – to own two homes for longer than a few months?