Buying your next home and selling the existing one at the same time
When wanting to move homes, you have to decide what you will do with the existing one. One option is for you to buy your next home and sell the existing one at the same time. This will introduce a property chain link in the entire transaction.
This means that the purchase of your next home and the sale of the existing one will be dependent on one and another. If one link in the chain breaks, the entire transaction falls through. If you want to go this way, here is what you need to know:
Risk of the transaction falling through and delays
You should be vary of your seller or your buyer pulling out of the deal. For instance, your seller could pull out at the last minute after receiving a better offer. This is called being gazumped. Click here if you want to know how to avoid it.
On the other hand, it is also entirely possible that your buyer does not like your property due to a bad survey or backs out because he could not find a mortgage.
Further, any unseen delays in any part of the entire chain will affect the other transactions, and you could risk losing your next home.
You will be a less attractive customer
Your offer on your next home is likely to be less attractive say as compared to someone who has a formal mortgage offer or has cash in hand. This is because as a seller, you want to ensure that when you have sold you property for your desired amount, the transaction actually completes. In a property chain, there is always a risk of the transaction falling through.
What you can do to ensure that the process goes smoothly
Property chains can lead to unpredictable situations and may cause you significant stress. Here is what you can do so that you move into your next home and sell your existing one in a stress-free manner.
Work out your budget
You should first get your existing home valued so that you have a clearer idea of what it would sell for. If there are any improvements or changes that can improve the property's value, you should do that. Then you think about whether you need more money to buy your next home.
Planning the finances
How much will you need to purchase your next home? Aside from the actual sale price of your next desired property, you will also incur additional costs. For this see our article on conveyancing costs. For instance, you will have to bear the burden of local authority searches, agents' fee, conveyancer cost, stamp duty cost, and hidden costs, to name a few? How will you bear these costs? Therefore, you need to need to check if you are financially able to do this.
You may need to arrange another mortgage or remortgage. Additionally, you can also consider taking out bridging loans which are short term loans, which will help you cover all the expenses you will incur in this process. Having a formal mortgage offer or a bridging loan will make you a more attractive buyer and bring more certainty in the process. However, bridging loans are usually high interests.
You need a good solicitor or licensed conveyancer
If your next desired property does not have any complications, you may choose to go with either a solicitor or a licensed conveyancer. However, you need to ensure that you find a proactive and communicative solicitor or licensed conveyancer since this process will require a lot of coordination between the parties.
Click here if you want to know whether you need a solicitor or a licensed conveyancer.
Exchange of contracts and completion
Both for the sale of your existing home and the purchase of your next one, you will be exchanging contracts and completing the transaction on a later day. It is pertinent that the entire exercise is carefully planned out and coordinated between the parties.
You can also choose to have the contracts exchanged and the sale completed on the same day. This way the money you get from your seller as deposit on exchange of contracts can go towards the deposit to need to give your buyer and the sale proceeds from sale of your existing home can immediately be paid to the seller of your next desired home.
When moving homes, you have to decide what you will do with the existing one. It's sale proceeds will go towards purchasing your next home. However, as one is dependent on the other, it is of utmost importance that there are no delays. If you stay on top of everything, you can easily buy your next home and sell your existing one simultaneously in a stress-free manner.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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