One important question to consider is whether, when selling one’s house with the idea of buying another one in its stead, one ought to buy one’s new house before or after one has sold one’s present one.
I have my own ideas about that and there is a case to be made to do it either way.
I would be curious to see what others think about the subject.
Pisces133
Just a thought, but why sell at all? Save the transaction costs and rent it or wrap it
-Nick
Hi Peter. Call me conservative but I personally would sell one place first before buying the other. Sure, you may have to rent for a little bit (or stay with family or friends) and store your belongings but it beats worrying about possibly two mortgages. It also depends on your actual situation and your comfort zones.
Cheers
Marty
>>but it beats worrying about possibly two mortgages. It also depends on your actual situation and your comfort zones.<<
The other side of the coin is that following that course of action (i.e. avoiding the situation of being stuck with two mortgages at the same time) means that prices may run away from you during the time it takes to find another suitable place.
And in a strong runaway market that may well mean that one cannot get back into the market.
(I actually know some people whom this happened to.)Damned if you follow the first suggestion and damned if you follow the second suggestion.
Bridging finance (where you do not pay interest for a limited time as it is capitalised) appears to be the solution to the dilemma though even that doesn’t give you 100% protection (in the situation for example where the buyers suddenly disappear and you finish up with two mortgages after all).
Pisces133
You also have to be careful if you sign a contract on a house subject to the sale of your own home, as the vendors might want to rent out the house your purchasing while you try to sell your own.
I could see this becoming a problem as you become responsible for both properties.
When we were looking for a new PPOR we found that first, stipulated in the contract subject to sale of existing proprty AND settlement on both properties to coincide. We then put the place we were selling on the market with the same agent we are buying through. So far it has gone very smoothly. She sold our old property to an investor in 3 days
If it had taken longer it would have been covered by the contract and we would not have had 2 mortgages at once.But you would have had to take out insurance from day one on the new PPOR.
If settlement occurs on them both simultaneoulsy we each take possession the same day. How does this affect insurance?
Not sure I’m with you there. Even if we had overlapping insurance premiums it is still cheaper than overlapping mortgages.
Sorry for the confusion, what Im trying to say is if you signed a contract to buy a new ppor but have to wait for your old house to sell then there could be months in between selling your old house and settling on the new one.
And once you sign a contract on a house you need to at least get a cover note for it as your now legally bound to the contract.
Hi Peter, I am about to be in the same position that you are in and not exactly sure which way to go.However, in this strong (sellers market) I am leaning towards buying first with the aim Of getting a longer settlement period of between 3-6 months. Whether or mot a prospective vendor will entertain a longer settlement is something I will find out in due course.
I believe we have avoided this problem by settling both at the same time (and stipulating the coincidental settlement as a condition of the contract). Not all vendors will accept this condition of course, they may have already bought elsewhere subject to sale and have a particular settlement date on their new property.
It has worked for us though and might be worth considering in PeterM’s scenario.
The relevent sections of the general conditions set out by REIWA are 6.4 and 8. These cover damage of property and passing of risk.
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