The idea of closing one chapter and opening another when upgrading your home can be an exciting prospect until you are posed with the question of buying first or selling first? Already feeling you stuck in a catch 22 situation? This guide can help you decide which one will work best for you and your finances
Buying
You may already have an eye on a hot property that could be snatched up any minute. It can also be convenient for purchasing a house while you wait for your current house to sell. To know if buying a house is worth it means comparing the pros and cons of this options.
Pros
- You have time to decide. Since you already have your current property to bank on, it will give you ample time to decide what house you want and in which area. It can also give you time to compare your finance options.
- Cut down on moving expenses. Buying a house first can give you the security of knowing that you already have a house to go to, instead of spending money on hotels or apartments while you wait to find property. According to a study by ING, Aussies forked out $863 million on moving house, with the average cost at $1, 618.
Cons
- The pressure of selling your house for less. Once you have settled into your new place you can get pressured into selling your current property for less to quickly get it off your hands. Corelogic noted that 89% of properties in Australia sold at a loss of 10%.
- Market conditions can prolong the selling of your house. There is the fact that being able to sell your house to finance your new purchase can take some time based on the current market conditions.
- You could end up paying for two homes. Getting a bridging loan can be a temporary solution for homeowners that do not have enough equity in their homes but are looking to sell. However, it could also mean that you will be paying for your current home and your new home at the same time.
Selling
It’s a fresh start and also an opportunity to have a do-over when it comes to purchasing property that works for your finances.
Pros
- Have a realistic budget. You will have the leverage of knowing how much you have in terms of your home buying budget and avoid overextending yourself.
- You can get a one up on other buyers. When you have a set budget and the finances ready it can give you an advantage of placing an offer on a suitable house without wasting any time. A seller is more likely to take someone's offer if they already have their finances sorted.
Cons
- The property market could change. Waiting for your house to sell will open a gap where the prices in the property market can change, meaning that by the time you are able to sell your house property prices could have increased considerably.
- You could be living out of your suitcase. Not being able to find a property on time to purchase can result in you having to stay at a paid accommodation. There will also be the cost of transport, storage, and unexpected food costs that can arise when moving around.
Before you sell or purchase the property it is vital that you assess the market conditions. Having an estate agent by your side can help reduce the stress of finding your new property, and it can also give you ample time to organise your finances. However, always remember to compare and carefully consider your options.