If you own your own home and intend to move on, you'll usually be faced with a dilemma: buy your new house first or sell your existing
one before you buy. We explore the pros and cons of both approaches to help you make the right decision, whether you're upgrading,
downsizing, or simply relocating.
Selling house before buying:
Selling your property before you buy lets you know exactly how much you have to spend on your next home. This can help you go into your purchase with some degree of certainty, and it can also help put your mind at ease, especially if you're risk-averse.
When you sell a house before buy, it means you may not be under the same time pressure for a quick sale, which can give you more leverage when it comes to negotiating a sale price. It can also give you some breathing space when you're looking for your next home, especially if you negotiate a long settlement period.
But there are some downsides to selling first, too. Once you've sold your property, you'll still need to live somewhere. That could mean
you come under pressure to purchase your next home more quickly if you can't find anything within the settlement period. It could also
mean buying in different market conditions, which could mean paying more for your next home if property values increase during the time it
takes you to sell.
Buying a house before selling first:
Buying before you sell is generally a riskier proposition. It means you're gambling on selling your house quickly so that you can fund your new purchase. If you can't arrange to settle both properties at the same time, you might need to take out an expensive bridging loan, which involves taking out a mortgage on two homes, not one.
That said, buying a house before you sell your existing house can be a sound strategy in a rising property market. It lets you lock in your purchase at today's prices whilst allowing you to sell your property at a date when prices are expected to be higher. It also gives you the freedom to find a home that's right for you before fully committing to selling your current one.
Ultimately, the decision on whether to buy a property or sell your own house first comes down to where you think the market is headed and your personal circumstances. So, before you choose what's right for you, ask yourself: