Move home without selling first


Thinking of moving? Don't know where to start? Most of the time we're ready to move in to something bigger, other times something smaller. Going in to a smaller house can be as simple as withdrawing equity from your current house but when you're moving into something larger you may need more cash than you have readily available. Here are your options.

Buy and sell at the same time

It can be done. It can be incredibly stressful though. The basic premise of this is really simple, buy a new house, try and sell yours as quickly as possible. Lately this has worked a treat for many people as the market has allowed for really quick sales. In slower markets though you risk buying a new house and no one wanting to buy your old house. The obvious risk is paying two mortgages at once or the bank not funding the purchase of the new house until the old house is sold which results in delays, missed contract dates which results in financial penalties. Personally I like this option but you've got to be confident you're going to sell quickly and this means pricing your property perfectly.

Buy and lease

If your income allows it and you're not relying on sale proceeds to use as a deposit on a new house you could buy a new house to live in and rent out your existing house. Not a bad option either the only thing I worry about here is that tenants may not present the property like you do which could in turn effect the saleability of your house or even just lower the price you can achieve just because of ugly furniture. Alternatively if you just want to keep your existing place as an investment this works perfectly but depending on the length of ownership you may attract capital gains tax but best to speak to your accountant if you're considering this.

Bridging Loan

These are a good option as well but they can cost a bit. A bridging loan allows you to buy a new house then sell your current house. The great part about this option is that there isn't a huge rush to sell the existing house. The downside is that the longer it takes to sell the more you need to pay to the bank and you only have so much control over the time it will take to sell. 

Essentially you get a second mortgage for your new house and the bridging loan pays for the extra costs until you sell your first house. For example, you've moved in to your new house and your old house takes another 3 months to be sold. The bridging loan will cover the costs of the first mortgage while you wait for it to be sold. Once the first house sells you close the original mortgage and close the bridging loan. The bridging loans' debt will grow the longer it takes to sell the first house so it is in your best interest to sell quickly if you get the price you want/need.