Selling your home is stressful enough, but when you’re also trying to find and buy your next property – or you’ve already bought it – you need more than luck on your side.
In a perfect world, you’d sell your home, put the money in the bank and your worldly possessions in storage, and take a year off to travel the globe. In the real world, you have to figure out how you’re going to navigate selling, buying, where you’re going to live next, and what order you do it all in.
These are some of the questions you may be asking yourself:
Should you try to time the sale and purchase so you can move into our new house just as the old house settles?
Should you sell your house first, before looking for another?
Should you buy first and manage two mortgages until your house sells?
Therein lies the dilemma. In working out what to do, consider what kind of market you’re working with and weigh up the pros and cons of each. Let’s break it down.
Timing it right
With strong negotiation skills and a savvy conveyancer or solicitor by your side, you just might be able to time the settlements of your old and new homes so they coincide. This dream scenario makes the transition seamless and minimises moving costs in the process. Be sure you have a Plan B in place should the timing go awry. Settlements can be delayed, lenders can slow things down, sales can fall through…
The obvious advantage of selling your house before buying another is that you know exactly how much you have available to spend on your next property. The disadvantage is that you may have to find temporary accommodation until you find the right property to buy. Whatever you do, avoid the temptation to buy something – anything – just so you don’t have to go through the hassle and cost of renting and/or storing the contents of your home. Buyer’s remorse will set in soon after you move in if the new house doesn’t really meet all your needs and wants.
Selling first is often a wise idea if you have little to no equity in your home or it may take a while to sell. This choice also removes the pressure to sell – you can hold out for the price you think your house deserves without another settlement hanging over your head. Selling first also minimises the stress involved in juggling two mortgages and two settlements.
If you do decide to sell first, be sure to take into account how much it will cost you in rent and moving costs – and the costs of breaking a lease if your house sells before the lease is up. The cheapest option, of course, is to move in with family and stash your stuff in their garage – for a short time, it could even be fun.
Researching the market is natural if you’re thinking about selling, but before you know it you’ve attended an open home, fallen in love and put in an offer. The only problem? You have yet to sell your own property and need the funds from the sale to pay for your new home.
If this happens to you or you’d prefer to know where you’re moving to before you sell, try to negotiate a long settlement of six months on your new property to give you enough time to offload your existing home.
If the market is such that there are more buyers than there are available properties, your home should sell relatively quickly. Even better is a contract with a clause that allows you to move settlement forward if your house sells within the six-month period. If your house takes longer than six months to sell, bridging finance will be unavoidable if you don’t want to lose the deposit (and the home you wanted to call your own).
Bridging finance is a short-term loan available to those with substantial equity in their homes. A bridging loan allows you to make interest-only repayments until your house sells and you can close out the loan. Some bridging loans allow the interest to be added onto the loan and repaid when your house sells rather than along the way in the form of repayments.
If you don’t have much equity in your home and bridging finance isn’t an option, a guarantor loan may be the answer. You’ll need to have a steady income (or two) and your parents must be willing to back you up as guarantors on the loan.
However you decide to proceed, all will be forgotten when you finally open the door to a new home you love and move in. You’ve just begun the next chapter of your life, and it’s time to get on with the business of making memories!
Want to find out what your home might be worth?
Our agents can provide a free appraisal of your home in person or online to give you an indication of what your home might be worth in the current market.