Or do at the same time? This is a question many people are faced with, and there are pros and cons of each option - which we recommend you weigh up, based on your personal situation. Read on to learn more.
When you’ve made the decision you want to buy a new property, you can easily get busy with the search for your dream home, scouring houses online and attending open homes. But then it dawns on you, what shall I do with my current property? Sell it first? Buy the new home first? Try and do both at the same time! Navigating the sale of your existing home and purchase of a new one is not easy, so you need to take the time to think through your options and what will work best for you.
The pros and cons of selling your current home first
When you sell your old home first, you can often go unconditional faster, as in essence, you’ve got the money in your hand from the sale of your house, so you’re all ready to go. This can be attractive to buyers.
Also, once you’ve sold your house, paid any real estate fees etc, you know what you have leftover i.e., exactly how much you have readily available for your next purchase. This makes searching for new homes and any negotiations, more efficient.
Finally, you have the opportunity to negotiate a longer settlement on the house you are selling, allowing you more time to find your new place. This option is more plausible when there is high demand for your property.
While there are pros, there are also cons. These include dealing with the unknown in house prices. For example, how would you manage if property prices jump up loads between the time you sell your property and the time you buy a new one? What would that mean for you and your family?
Also, another thing to consider is where you will live between selling your home and buying a new one. And will you need to pay for this accommodation? Do you have budget for this and for how long? As well as you physically moving, you need to pack up your old home and store the contents. Many people find having to sort accommodation and storage rather stressful.
The pros and cons of buying a new home first
If you’re buying a new home without having sold your current one first, you will most likely make the purchase of the new home ‘conditional’’ on selling your current property. One of the positives of this option, is that you provide yourself some ‘time’. You won’t be tied to two properties at once and given there is no immediate settlement date, you don’t need to stress and rush around packing boxes and moving out of your current home just yet.
On the flipside of this, buying a new home first carries the risk of never selling your current property, and then you may be left covering two mortgages. And the fear of not selling, may result in you accepting a lower price.
Also, when you buy a new home first, you’ll need a deposit for this new property, which can be both challenging and stressful to come up with this money when your finances are tied up in your current home. Plus, in essence you will own two places, so double the expenses, things like rates, water etc.
Buying and selling at the same time
While this appears the perfect solution, it’s not always easy to achieve as you need settlement dates on both properties to align. So, when working on this option, we recommend you always have a Plan B, as things can change, dates can change; it pays to be prepared.
Deciding on what to do is a big decision. We recommend you speak with a professional financial adviser FIRST, as they will go through your options and recommend one that suits you and your situation best.
With over 50 years combined experience, we’re trusted advisers and help our clients make such decisions. Contact us today to talk about your options.
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