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Selling Your Home First Versus Buying Your New Home First

Selling your home first before buying another

Advantages:

  • You’ll know exactly how much money you’ll have to buy another home. 
  • Funds are readily available upon settlement, so you’ll also know when to plan the new home’s settlement date.
  • You don’t need to rush the sale of your existing home and can afford to wait for the best possible offer as you’re not maintaining two mortgages, nor need bridging finance.
  • Reduced financial and emotional stress.
  • Cash is king and might allow you more negotiating power as a buyer – especially in a competitive housing market. 

Disadvantages:

  • Property prices might go up when it takes time to sell and buy, so you could spend more on buying your new home than budgeted.
  • Potential rental costs until you’ve bought a new home and the inconvenience of moving twice within a few months. You might not be able to find short-term rentals at all due to a very high demand in the current market.

Buying your home first before selling your current property

It is hugely advantageous for those with the financial capacity to buy a new home while still on the market with their current property. You don’t need to worry about renting and can move straight into your new home whenever it suits you.

Advantages:

For those with the financial capacity – cash or bridging finance – buying a new home first and then selling their current home, has many advantages. Mostly, it can avoid the hassle of renting or being otherwise displaced for the interim period.

Disadvantages:

There are still a few financial risks involved to consider:

  • If you took out bridging finance, you’re paying off two mortgages in the time it takes to sell your old home.
  • You might feel pressured to sell your current home quickly, which could result in accepting a lower offer.
  • Selling your home could add financial and emotional strain if it takes much longer than expected.

If you want to buy and then sell but don’t have the money available, bridging finance might be an option.

In short, a bridging loan is designed to ‘bridge’ a short-term funding gap. Bridging loans is generally 6 to 12 months, the expected timeframe for your home to sell. They’re usually ‘interest-only’ loans, so you’re not continuing to pour equity into your older home and your new home, which means you need to repay less—but be aware that the interest rate is considerably higher than the norm.

For more information about bridging loans, please contact a qualified mortgage broker who will help calculate your “peak debt.” Lenders decide on a borrowing capacity by calculating what will be realised from selling the old property while also considering the purchasing costs for the new home.

If you are considering selling a property in Albany, Mount Barker, Denmark or Walpole areas, please contact or call me to discuss your needs. Consultation, advice and appraisals are free of charge, with no obligation or harassment – ever.