Timing is everything

Whether you should sell your current home before buying or buy before you sell is one of the questions we are asked all the time. The truth is, there’s no one size fits all answer, but you can come up with your own solution by looking at the implications of each decision.

Remember to carefully consider your personal circumstances when going through each of the following categories:

Finance

Firstly, and often most importantly, is the question of finance. Can you afford to hold onto your current home while making repayments on a second mortgage as well? If you cannot, then your decision to sell first may have already been made for you.

You could also consider bridging finance. Some home buyers will be eligible for this product, which can allow you to buy a new home and make interest only repayments on your current home until it is sold. This can come with quite high levels of interest to repay, so ensure you’ve done your homework before diving into any new loan product.

“Can you afford to hold onto your current home while making repayments on a second mortgage as well?”

Some homeowners will also realise that they can afford to hold onto their existing home as an investment, rather than needing to sell at all. This is something you should consider ahead of time.

It is worth speaking to your mortgage broker, financial adviser or chosen lender before making any financial decisions to check you’re eligible for the mortgage you might need to buy your next home. This will help you iron out and identify any problems upfront.

Timing

You don’t want to be desperate for a buyer for your home if you’ve sold before you’ve intended to nor rushing into buying a home without thinking it through because you need somewhere to live. The advantage when buying and selling is almost always with the homebuyer who has the privilege of time.

But if you see your dream home, the fear of missing out can be strong. The best situation for any homebuyer and seller is to be ready to purchase whenever you see the home you want come up for sale. For many, this will mean selling in advance and preparing for when that property comes onto the market.

“If property prices aren’t moving too quickly, then you have more choice.”

You also need to consider the current real estate dynamics in your area. If you’re in a market that is increasing quickly in value, then selling first and struggling to buy a home later may leave you out of pocket and rushing your buying decisions. If the market is falling in value, then selling first can have benefits if you’re buying into the same market. If property prices aren’t moving too quickly, then you have more choice. Speak to us about how the market is currently tracking to get a better understanding.

Practical considerations

You should also be aware of the practical circumstances that exist around buying and selling. If you sell first, you will have to live somewhere else if you cannot negotiate a long settlement. This means you will likely face two lots of moving expenses and possibly the costs of alternative accommodation, such as the private rental market. For homeowners with families, pets and other situations, this can be a bitter pill to swallow, particularly with no guarantee as to when you’ll find your next home.

But for those willing to bite the bullet, being in a temporary arrangement, such as living with relatives, means you’re a motivated homebuyer and ready to move immediately when the opportunity arises. Ensure you speak to everyone involved with the move to make sure they’re on board to avoid future issues.

There are other material considerations you should also bear in mind. Whether it’s a child studying for the HSC, stress, needing to live close to certain areas or any other personal circumstance, now is the time to give it careful consideration.

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