Navigating the property market can be challenging, especially when faced with the question of whether to buy a new home before selling your current one or to sell first and then buy. Both approaches have advantages and risks, and the right choice depends on your personal circumstances, financial position, and market climate.
Buying first: Pros and cons
Opting to buy your next home before selling can offer peace of mind, especially if you’ve found a property that suits your needs and preferences. Here are some benefits and considerations:
Pros
- Security in availability: Buying first ensures you won’t miss out on a dream property. This approach is ideal if you’re looking for specific features or a particular neighbourhood where properties are in high demand.
- Flexibility in moving: Owning your next home before selling offers the flexibility to renovate or prepare the property without the pressure of an immediate move.
Cons
- Bridging finance needs: If your finances are tied up in your current home, you may require a bridging loan to fund your new property. Bridging loans can be a solution, but they often come with higher interest rates and additional fees.
- Market volatility: If the market shifts after you buy, you may have a harder time selling your current home at the price you’d hoped.
Selling first: Pros and cons
Selling your home first can alleviate some financial uncertainty, but it also brings its own set of challenges. Here’s what to consider:
Pros
- Clear budgeting: With the proceeds from your home sale in hand, you’ll have a better sense of your budget for your next property, helping you make informed offers.
- No overlapping loans: Selling first typically means you’ll avoid the complexities of a bridging loan, which can simplify your financial situation and reduce risk.
Cons
- Pressure to buy: If you sell before finding your next home, you may feel pressured to buy quickly, which can lead to compromises or less favourable choices.
- Potential renting costs: In some cases, you may need to find temporary accommodation between the sale of your old home and the purchase of your new one, adding to costs and logistical stress.
How to decide?
Choosing whether to buy or sell first often depends on your current financial position, your timeline, and the state of the market. Working closely with a financial advisor or mortgage broker can help you assess your borrowing capacity, weigh up the cost of a bridging loan, and outline a plan that aligns with your goals.
Whether you decide to buy before you sell or vice versa, having a clear strategy in place will help you transition smoothly and make the most of your property journey.
Ready to explore your options or need help navigating the property market? Click Here to get in contact with a UFinancial team member today, for personalised advice and support tailored to your unique situation.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent. Content developed in partnership with IFPA.
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