Life Changes Home Buyers

If you’re already on the property ladder, buying your next home is usually easier than the first time around. Whether you need to move to a bigger place, are looking at downsizing, or just want a tree change, the equity you have grown in your existing property can often give you more buying power and that can mean more choice.

When buying your next home, it’s important to consider the financial aspects of making your move. There are several ways to go about buying your next home and we’re here to help you decide which option is right for you and to help you set up the appropriate financing for the method you choose.

Selling before you buy

Talk to Sorted Mortgages whilst you are getting ready to sell your existing home. Selling your existing property before you buy your next one allows you to avoid having to organise bridging finance, or cover the expense of two mortgages at once. You also have the advantage of knowing exactly how much money you will have to spend on your next property.

The downside is that you may have a period of time between moving out of your existing home and settlement on your new property. This could mean that you need to rent for a while whilst you look for your new home, or wait for settlement to occur.

Ideally you will want the buying and selling process to occur as close together as possible. You may be able to avoid having to rent – and the hassles of moving twice – if you negotiate a long settlement when you sell your existing home and a short settlement when you buy your next one. However, this strategy may be difficult to manage for most people, so you should factor in the costs of renting from the outset.

Buying before you sell

Perhaps you’ve found exactly the right new place before your existing property has sold, and you don’t want to miss out. Maybe you’re building a new home, and need to stay in your current place until the construction process is complete.

If you plan to buy your next home before selling your existing one, it is particularly important to talk to us about getting pre-approval on a financing arrangement and to talk to us about the most cost-effective way to arrange it.  

Sorted Mortgages can help you with several different financing options, depending on your plans. We can help you choose the option that is right for you considering your personal financial situation and goals. For example, we may be able to arrange a loan that combines the home loan for your new property with the amount outstanding on your existing home loan, so that you only have one loan to repay instead of two while you’re waiting for your first property to sell. Or if you’re building a new home, a loan arrangement that defers repayments on the loan for your new home for up to 12 months.

Keeping your first home as an investment

Sorted Mortgages can help you to work out if this option is a viable proposition for you.

The longer you hold on to a property, the more likely it is to go up in value to give you a profit when you sell. That means it may be a wise move to hold on to your first home for a while and rent it out as an investment property so you can maximise your potential capital gains over a longer period of time.

Whether or not you can afford to keep your first home as an investment depends entirely on your personal financial situation. If you don’t plan to sell your existing home to get funds towards your next purchase, you will need to consider how you will obtain the funds to use as a deposit on your new home. If you don’t have a deposit saved, you may need to have your existing property valued to determine the amount of equity you have and then access some of the equity for your deposit.