The relocation exercise would become much easier if a homeowner could sell their home and at the same time get to buy another one. However, it’s not always possible for things to work out in this manner. In essence, there exist a multitude of reasons why one may choose to buy a new house before their current one is sold.
For instance, it may be taking longer than expected for you to offload the current home. Alternatively, you may have found your ideal home before listing your home.
In case you opt to buy before selling your home, it will help to know your options. It’s also a good idea to explore your options when it comes to how to sell your house quickly. Also, look into how you will finance the new purchase.
Available Financing Options
A deposit bond or a deposit guarantee is a financing option you should consider exploring. Rather than place a cash deposit to buy the new home, a lender gets to provide you with a deposit guarantee. For the buyer, it’s a reassuring option as it guarantees the estate will still be available for purchase, even as you wait to sell the current one.
Another solution is to source for a bridging loan. It’s recommended for any person facing a time gap between the purchase of a new home and the sale of another.
The loan is mainly used for short term durations, e.g., between 6-12 months. What happens is you apply for a bridging loan which you use to pay the deposit for the new home and then repay the loan once the proceeds from the home sale come in.
While the loan is costlier than your average mortgage, it’s advantageous in that it does provide you with additional time. You get to fund your deposit even as you wait for your home to attract a buyer willing to meet the asking price.
Getting a bridging loan is advisable as opposed to settling for a low offer to prevent your dream home from being sold.
Having a Chat with Your Lender
If you are considering buying a new home before selling, it may be worthwhile to have a chat with your current lender. Depending on the remaining loan balance and the terms of your mortgage, the lender may provide additional financing to help you fund the deposit.
Why Consider Buying Before Selling?
Even though buying before selling isn’t common, it does offer several benefits to the interested party, more so if they have the financial muscle to make it a reality. As you continue looking into ways to sell your house quickly, get to familiarize yourself with the benefits of buying before selling:
Enough Time to Search for a Good Home
Completing the purchase first will provide you with ample time to concentrate on each transaction without feeling rushed. Most sellers have to rush through a buying process before finalizing the sale of their current home as they don’t want to have to live in a motel or hotel. By buying first, you get to allow yourself enough time to search for a good home.
Time to Remodel
Given that you already have a place to live, you can choose to slowly customise or remodel the new home before shifting from the old residence. This is better as compared to relocating from a liveable house and straight into a construction zone.
If considering buying before selling, begin by establishing the length of time it will take you to sell the old house. You may want to try to sell as fast as you can to avoid having to pay two mortgages. Note that the listing is likely going to be in the market for a few weeks before you can close.