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Finance The Gap - Between Your Property Purchase and Sale
It's not always possible to ensure a smooth transition between the purchase of
a new home and the sale of your old one. But there are a number of ways to
mitigate the expense - and the impact on your family - should you find yourself
in this position.
Assuming you've done the required research and made realistic assumptions on
your capacity to upgrade to a new home, the next step is to determine a buying
strategy. The most important part of this strategy is whether you should sell
first then buy; or buy first then sell.
Both strategies have a number of pros and cons, and an assessment of your needs
and wants will determine which is best for you.
Selling first and then buying is your safest bet as you will not be pressured
into taking a cheaper price for your property under financial duress. You'll
also have a measure for what you can spend on your next property while
minimising any stress placed on your family or marriage.
Bear in mind that by selling first you may be without a home for weeks, or even
months. Not only will this disrupt family routine, you will also need to
allocate funds for rent, increased living costs as well as storage.
Alternatively buying first presents its own set of challenges, mainly the very
real possibility that you may need to pay off two mortgages simultaneously.
One way to moderate this situation is to ask your solicitor to draft a clause
making the purchase of your new home conditional on the prior sale of your
existing property.
However in the event that you do find yourself burdened with two properties
there are some alternatives: pay the default interest under the purchase
contact for not settling on time or apply for bridging finance.
Bridging loans are generally available for up to 12 months for borrowers that
have sufficient equity in their home. They are usually interest only with rates
sometimes as low as the standard variable rate, although more often than not,
they are one to two per cent above.
When crunching the numbers to see whether a bridging loan is cheaper than
paying default interest, you should also factor in between $500 to $1,000 for
application fees.
Explore the feasibility of bridging finance when securing pre-approval for your
new home purchase - it is useful to know whether it's an option should you find
yourself with two properties.
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Did You Know?
We can help with Bridging Loans or any other home loan.
Contact Lending Hand Finance on
1300 850 545 or
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