It’s a common conundrum, and a little bit like the ‘egg before the chicken or the chicken before the egg’ mystery. Should you list your home for sale before you’ve found something to move into, or wait until you’ve found your dream home before selling your current house?
It’s a catch 22, and everyone’s situation will be different. The answer weighs heavily on market conditions and your own personal circumstances.
In a buoyant and fast moving property market, like we’ve experienced over the past few years, it will definitely be an advantage (when buying a house) if you’re not conditional on selling your own home. However not everyone’s situation will allow them to buy before they sell. Many people will need the financial assurance of having money in the bank in order to buy their next property.
A good place to begin would be speaking with your mortgage broker or bank to gain a clear understanding of your financial standing. Ask them if you have the ability to access bridging finance, which would ultimately give you the security to make an offer on a property, not subject to selling yours first.
Bridging finance is when the bank provides a loan on the new property while you still have the current property loan in place. Essentially you’d have two mortgages for a period of time, until you’ve sold your current property. This is not for everyone and there are risks involved so speak with a professional to make sure it’s right for you.
The other option is selling your home first, but you need to have a clear strategy for finding somewhere else to live once the new owners take over. You could make sure you push the settlement date on your own home sale out as far as possible, to give you plenty of time to find another house to buy. Or have a contingency plan in place should you inevitably end up with no home in your possession.
If you’re caught out with no property then renting a house or staying with friends could be an option for you, but make sure you’ve thought about this before embarking on this journey.
