Should you buy before you sell or sell before you buy?

WITH THE UFINANCIAL TEAM

Navigating the property market can be challenging, especially when faced with the classic conundrum of whether to buy a new home before selling your current one or to sell first and then buy.

Both approaches have advantages and risks, and the right choice depends on your personal circumstances, financial position, and the market climate.

Buying first: pros and cons

Opting to buy your next home before selling can offer peace of mind, especially if you’ve found a property that suits your needs and preferences. Here are some benefits and considerations:

Pros

Security in Availability: Buying first ensures you won’t miss out on a dream property. This approach is ideal if you’re looking for specific features or a particular neighbourhood where properties are in high demand.

Flexibility in Moving: Owning your next home before selling offers the flexibility to renovate or prepare the property without the pressure of an immediate move.

Cons

Bridging Finance Needs: If your finances are tied up in your current home, you may require a bridging loan to fund your new property. Bridging loans can be a solution, but they often come with higher interest rates and additional fees.

Market Volatility: If the market shifts after you buy, you may have a harder time selling your current home at the price you’d hoped.

Selling first: pros and cons

Selling your home first can alleviate some financial uncertainty, but it also brings its own set of challenges. Here’s what to consider:

Pros

Clear Budgeting: With the proceeds from your home sale in hand, you’ll have a better sense of your budget for your next property, helping you make informed offers.

No Overlapping Loans: Selling first typically means you’ll avoid the complexities of a bridging loan, which can simplify your financial situation and reduce risk.

Cons

Pressure to Buy: If you sell before finding your next home, you may feel pressured to buy quickly, which

can lead to compromises or less favourable choices.

Potential Renting Costs: In some cases, you may need to find temporary accommodation between the sale of your old home and the purchase of your new one, adding to costs and logistical stress.

How to decide?

Choosing whether to buy or sell first often depends on your current financial position, your timeline, and the state of the market. Working closely with a financial advisor or mortgage broker can help you assess your borrowing capacity, weigh up the cost of a bridging loan, and outline a plan that aligns with your goals.

Whether you decide to buy before you sell or vice versa, having a clear strategy in place will help you transition smoothly and make the most of your property journey. Looking for advice and guidance, suited to your circumstances, head to ufinancial.com.au