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Making the decision to sell your home and move on to the next purchase can raise questions about the order in which you buy and sell. Should you sell your property to free up finance and gauge how much you can feasibly spend on your next home, or should you buy first and then sell?
Either option is a personal decision where you must weigh up the benefits and risks that are associated and ask yourself questions such as, would be comfortable to rent for a time while waiting to purchase? Is there maintenance that needs to be done at your home? Can you afford to upsize or downsize? Will your property sell?
Selling before buying
Choosing to sell your home before purchasing another can assist with determining the value of the property and any potential proceeds from the sale. This can help make the decision about buying your next home as you will be aware of any capital that has been gained once the property has been exchanged and any mortgages discharged.
Selling first will mean that you will also have some certainty around the sale and reduce risk before purchasing. It also eliminates the potential need for acquiring finance options like bridging loans.
The disadvantages that can present if choosing to sell first include the need to potentially live somewhere else while looking to purchase your next home and waiting for settlement on the new property.
Buying before selling
The benefits of buying before selling your current home include the certainty of knowing that you have another home to move to. This can be beneficial in a market where there is strong competition and prices are on the way up.
This would mean that you are likely to receive more for your existing property when you choose to sell but purchase a new home before the market rises.
If you do choose this option and you need to allow space to buy your next home, talk with your agent and solicitor about a longer settlement period on the property that you are buying or the option of renting the property back for a period. This will give you more time to prepare and sell before moving to the next home and can also assist with working out the financial implications of owning a property.