Sell first or Buy first?
No matter if, you are moving up or down the property ladder, this can be a tricky decision to make! It’s a bit like the chicken and the egg, do I start looking for my new house before I sell, or do I sell first? Here are a few options below that you may want to consider. Before you begin, it’s best to get your finance specialist involved from the start so that they can help you through this journey.
Selling first: If you have little to no equity, or if your property may take some time to sell. Keep in mind that while you will have the funds from the sale of your home to purchase your next home you may need to rent in the meantime (or move in with the in-laws).
Buying first: If you are in a strong equity position & a strong serviceability to hold both properties, this option avoids you paying rent, but you must ensure that you have the financial resources to cover the mortgage on both houses. Not having to do a subject to sale may allow you to put in a stronger offer.
Simultaneous settlement: If you can arrange both the purchase and the sale to settle on the same day, you will need to have excellent negotiation skills to make this work. While this sounds like a great option for all parties, if settlement is delayed, it can cause problems in the chain and may cost you in penalty interest. When putting in an offer that is subject to sale, you may end up losing your dream house if there becomes another offer prior to you offer becoming unconditional, especially if there is a “48 hour” clause on the contract.
Bridging loan: If you have significant equity, but do not have sufficient income to hold both properties for an extended period, a bridging or “home to home” loan allows you to purchase your new home whilst waiting for your current property to settle. You may want to have your current property ready for sale to minimise the bridging period, and being realistic with your sale price to avoid your property becoming stale.
Buying off the plan: If you have an existing property but are looking at purchasing an apartment that won’t be completed for say 2 years, developers allow you to purchase the property but generally require a 10% deposit to be paid now with the balance on completion of the apartment. If you currently own your house, 2 years can seem like an eternity away to then quickly sell. If you have sufficient equity you can release the 10% now and then prepare your house for sale closer to the completion date, but, bearing in mind that you have an unconditional offer on the apartment and you must settle on time or face penalties or legal action from the developer.
Having an expert team around you: Buying or selling our house can be a stressful time. But with careful planning and having a team of experts such as The Agency Property Partners, Mortgage & Finance Solutions Finance Specialists and Landmark Settlements Conveyancers can look out for you and be there to help guide you.
I’ve been able to help many clients through the process of getting into their dream home. By speaking to clients, before they make a decision, I believe that I give them the confidence to proceed to sell or buy and to assist with a strategy that works for them.
Colin has won multiple industry awards and his clients’ say that he provides honest and clear information, able to think outside the square when required and provide financial solutions to them.
Thinking of selling or buying then call Colin today on 0419 944 497.
