There’s no hard and fast rule about whether you should sell your current property, or buy a new one first. It really depends on your personal circumstances and preferences.
For many people the financial flexibility that comes from selling their house first makes this the best option. However, if you can afford to, buying a new home before selling could end up being less stressful.
It’s sometimes possible to time your move so that you sell your house at the same time as buying a new one, meaning you can move straight in.
Below we look at the pros and cons of selling a house before buying, and buying a house before selling, and offer our advice on how to make the whole process a little less difficult.
This timeline looks at the process of buying and selling a property at the same time.
This timeline is suited to those looking to buy their new home with a mortgage. There could, therefore, be slight variations in this timeline depending on your personal situation. For example, if you have the funds readily available, you may choose to put an offer on your new home first.
Getting a clear picture of your financial situation is perhaps the most important step in the selling and buying process.
Start by figuring out how much equity you have in your current property. Will selling your home cover the amount left on your mortgage - including any exit fees, and early repayment charges? How much will you be able to put towards a deposit?
These types of questions will give you an objective sense of the amount you can put towards your dream home, before you start searching the market.
You should also bear in mind the additional costs that come with buying and selling. These will include stamp duty, conveyancing fees (for selling and buying), estate agents fees, and mortgage arrangement fees.
Take the time to think more broadly about your finances too. If your new home is more expensive than your current house will you be able to afford the monthly mortgage payments? Will there by any ground rent or service charges you'll need to budget for?
Once you have a clear picture of your financial situation, you will be in a better position to search for your new house.
If a buyer makes an offer on your current home, you can choose to either accept, or negotiate the offer. This will depend upon how generous the offer is, and how quickly you'd like to move ahead. Your estate agent should be able to provide guidance on the best way to proceed - but ultimately the decision will be yours.
Once you've formally accepted the offer, your buyer will probably want to arrange for a survey to be completed on your house. These give the buyer a detailed view of the condition of your home, and can range from a quick walk around, to an intrusive investigation of the structural integrity of your building. In either case a surveyor will require access to your current home to conduct the survey.
You don't have to pay for this - but, if you don't contribute the buyer isn't obligated to show you the results. And, knowing what's wrong with your house could be in your best interest, because if there is anything 'wrong' with your property, the buyer may try to renegotiate the price.
Being aware of any potential issues will allow you to walk into these re-negotiations confidently. For example, you could offer to fix the problem before you move out, or research how much it would cost for the buyer to sort out and take this amount off their offer price.
Once you have an offer in place on your current home, you'll be in a comfortable position to make an offer on the property you'd like to buy. This is because, if you need a mortgage for your purchase, your offer will be taken much more seriously if your property is already under offer or sold subject to contract.
In more competitive markets, sellers will be more favourable to someone who's able to move right away. You may find your offer will not be accepted at all if you're not yet in a position to move.
On the other hand, if you already have the funds available to buy your next home without selling first, your offer is likely to be accepted at any point in the buying and selling process. You will just have to provide evidence that you have the money available straight away.
If your offer gets accepted, you'll then start all the legal bits. This is called 'conveyancing', and is the legal process of transferring ownership of a property from one person to someone else. When you buy and sell a house simultaneously, you'll be going through the conveyancing process twice. Once to pass ownership of your home to the new buyer, and again to take ownership of your new home from the seller. This creates what's called a 'property chain'.
At this point you'll need to arrange your mortgage, and get surveys and searches done on your potential new home. This is a similar process that you will have experienced after accepting an offer on your own property. However, when buying a house you will need to pay for the surveys and searches yourself.
The type of survey you get will depend upon your budget, the type of property you're buying, and your mortgage provider's requirements. For example, if you're buying a new house, it's likely you'll only need a 'snagging' survey, which is a fairly unintrusive investigation into the quality of work on the property. In contrast if you're buying a fairly old home you may want to consider a more thorough survey of the building's structural integrity.
Remember, if any issues arise at this stage you may be able to negotiate a discount on the final purchase price. It can be useful to research how much it would cost (and how long it would take) to fix the problem. You can then use this information to negotiate a discount on your new house. Or, if the issues are too extensive, for example the property has subsidence, you may decide it would be better to buy another property.
Many local estate agents don't get paid until you've completely moved out of your home. This means they'll be keen to get you through the conveyancing process quickly as possible. At this stage, it's their job to monitor the progress of the sale, and assist where they can. This could include providing information or acting as a middle man, as well as providing advice.
However, there are a number of things that an estate agent can't control, for example: surveys, searches, and the speed at which other people in the chain fulfil their role.
The most important thing to remember at this stage is that it's all about open communication, and efficiency. Make sure that your part of the chain stays on track as much as possible, and this will help give your home sale, and purchase, the best chance of succeeding.
The day you exchange contracts is the day that the property sale is made official. You'll pay your deposit for your new home (and be paid a deposit by the buyer purchasing your house). After this point it's incredibly difficult to pull out of the sale.
The final step is to prepare for your move!
Firstly, you'll have to settle on the 'completion date'. This will be the day that you move out of the property you're selling, and pick up the keys to your new home. They don't have to be on the same day, but remember that if you 'complete' on your home sale before you can move into your new house you'll need to find somewhere to stay (and store your things) in the meantime.
Once this is arranged you can get down to the logistical bits, such as:
A 'settlement contingency' is a clause you can add to your offer on the property you wish to buy. Including this clause means that your offer is dependent on the sale of your existing home completing successfully.
In order to use a settlement contingency, you'll need to make sure you've received an offer on your property first, before you submit an offer on the home you want to buy. You'll then need to specify upfront in writing that you'd like to include the contingency as part of your offer.
It's important to note that a contingency clause may make your offer look less attractive to the seller - particularly if they have received other offers. However, it will provide financial protection in the event that your home sale falls through and you can no longer afford to go ahead with buying your new home.
Taking a flexible approach to the negotiation period can go a long way to securing you the best outcome when you're buying and selling at the same time.
For example, if having the completion dates of your old and new homes close together is important to you, try and compromise on other areas of the contract in exchange, for example, which fittings and fixtures you could leave behind.
One of the best ways to make buying and selling easier is by making sure to deal with any paperwork quickly and efficiently. This will ensure that you hold up your part of the chain, and don't risk jeopardising or delaying the process.
It can help if your conveyancer is based nearby, so you can hand deliver any paperwork (and so know exactly when they've received it). But, if that's not possible, there are also a number of conveyancing solicitors who also have scan and send services.
Online reviews provide great insight into how fast moving and communicative firms are.
If possible, try and exchange the contracts for your new property on same day as you exchange with the buyer of your current house. You will then be able to put the money they send towards your new deposit.
Of course, it's not often that the deposits will match up exactly. Keep on top of your budgeting throughout the buying and selling process so you're not caught out if you have to pay a bigger deposit for your new home.
Effective communication can go a long way to ensuring that your property sale goes smoothly. Keep in regular contact with your estate agents and your conveyancer. This will ensure that you complete everything you need to on time. And because you're consistently at the forefront of their mind you'll also encourage them to prioritise your home sale.
Don't be afraid of appearing pushy - you're paying your estate agents and lawyers a lot of money to make sure your home sale (and purchase) goes to plan.
For many people the most financially viable option is to sell first before they buy a new house. If you sell first before you buy, you’ll know exactly how much you can spend on your new property, and won’t have to worry about paying two mortgages at the same time.
However, in some cases selling before you buy will mean having to move into a temporary living situation such as a short term rental, or family home, for a short period of time.
You know exactly how much money you can put towards your new home
You don't have to worry about a chain falling through if you don't find a buyer quickly
If you’re moving to a new city, renting for a short time can help you decide which area you want to live in
If you already have a buyer in place, you’ll be in a stronger position to quickly secure your new property. Because you’re ready to buy with no delays, you might be able to use your position to negotiate a better price.
If you have to move into a short term rental property, it can be stressful to have to move twice within a short period of time
Moving twice can also be expensive. You’ll have to budget for the cost of rent, removal and storage
Buying before you sell your property will give you the flexibility to submit offers on new homes without having to worry about where you’ll live. However, unless you have the cash on hand, it can be difficult (but, not impossible) to buy before you’ve sold your old home.
You may be able to include a home sale contingency in your offer which stipulates that you will only buy the property if your current home sells. But, if you don’t already have an offer on your home, this sort of clause is likely to weaken the appeal of your offer. If there are other interested buyers who are able to move without waiting for an offer to come in, they are likely to be much more attractive to the seller.
Another option is to take out a short term or ‘bridge’ loan to pay off your current mortgage. Then when you sell your home you can use the proceeds of the sale to pay off the loan. This can be risky. These types of loans have high interest rates, and if something goes wrong with your sale, you’ll still be responsible for paying it back on time.
If you’re buying before you sell, you’ll also need to consider: Stamp Duty. If you intend to buy a house before you’ve sold your old one, you’ll need to pay an increased rate of Stamp Duty Land Tax. When buying an additional residential property, policy dictates that you pay an extra 3% stamp duty, on top of the amount already due. HMRC will refund this 3% if you sell your old home within 3 years - as long as the new house is your new ‘primary residence’. However, to claim this refund, you’ll need to apply on the HMRC website within 3 months of the sale, or 12 months of the filing date of your Stamp Duty Land Tax return, whichever comes later.
You have somewhere to move into right away
You will only have to move once. This means you’ll save money on rent, storage and removal costs
You’ll be less pressured to make quick buying decisions
If you have access to the cash funds to buy a property out right, your offer will be more attractive than a buyer that has to rely on arranging a mortgage.
You may feel rushed to sell, or have to accept a lower offer than you would otherwise
Sale contingent offers are less competitive - and may not be accepted.
It may be more difficult to make a competitive offer if your money is tied up in your current home.
You will need to pay a Stamp Duty surcharge upfront, and then later apply for a refund
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