As time goes by, we can find ourselves and our families growing and changing. Whether it's a new baby, an older relative moving in or perhaps all of the kids leaving for university, this can all create the need for a new home to suit a changing lifestyle.
But there is always one age old question that seems to pop up in the minds of homeowners: Do I sell or buy first?
Each option has its own pros and cons, but it's ultimately dependent on how much time you have and your financial circumstances.
Selling your old house before buying a new one gives you the luxury of time. This is because you won't be in a rush to sell and transfer your existing home mortgage to cover the costs of a newly purchased property.
As you won't be in as much of a hurry, you can take the time to negotiate a good price with prospective buyers. This could potentially lead you to secure a more desirable sale price than one you would achieve through a more rushed sale.
If you sell your old home first, then you will have a rough estimate of how much you can spend on your next property. Obtain a valuation and ask a real estate agent for an appraisal so you can get a good idea of your next property's budget.
However, selling first does have a couple of downfalls. You'll need to quickly find accommodation once your home has sold. Whether it's buying a new home during the settlement period or renting accommodation after you've moved out, this will need to be factored into your decision to sell first.
Buying first is a great option for those who have little ones or elderly loved ones, as you will have already found a place to move your family. This means you won't have to scramble to find accommodation once you sell your old home.
You'll also have a lot of time to find your dream home because your old property won't be on the market for sale. This gives you the ability to negotiate a good purchase price for your new home.
However, you must be financially stable enough to cover the costs of mortgage repayments for both properties for however long it takes to sell your old property.
This can usually mean that owners will rush the sale of their old home so they can reduce the cost of owning two houses. As a result, you may not receive the best price possible for the sale of your old home.
There are many options available for homeowners who want to buy a new property.
For instance, those who want to buy first can use a bridging loan. These mortgages allow buyers to move on to a property without having to wait for their old home to sell. Usually, bridging loans have shorter terms of up to 12 months and have the choice of variable or fixed mortgage rates.
Loan portability allows borrowers to use their existing loan to purchase another property after it has sold. It's a feature that can be added on many home loans, which gives borrowers the freedom to move onto a new property. There may be restrictions regarding values of the properties and settlement dates, so make sure you discuss this with your lender.
Both options can involve fees and charges, so it's best to speak to your lender to determine how this may affect your budget.
Tags: buying a new home