The Best Mortgage Broker Answers-Should I buy a house before or after I sell my existing one?

August 15, 2021 By: Nfinity Financials0 comments

Even When selecting buying first or selling first from the best mortgage broker, several things must be considered, including your age and financial goals. So, before you sign on the dotted line, consider the pros and cons of both scenarios, as well as why the reason you’re buying a new home matters.

Why would you opt to buy a new home?

Whether you’re a seasoned investor or an owner-occupier wanting to improve, the reason for the acquisition may help you decide whether or not to sell first. This includes the following:

1. Your family is booming.

The best mortgage broker states that one of the most common reasons Australians opt to buy another home is that they have outgrown their current one. If the value of the present house has improved, selling it before purchasing the next one may provide you with a larger pool of money to work. You might, however, pay some rent before purchasing new house.

2. You’re on the verge of retiring.

If you’re approaching this stage of life, you may be assessing your current assets to determine how much money you’ll be able to generate. It may influence your choice to sell before purchasing in one of two ways: either you require the passive income generated by renting out your present home, or you’re concerned that this passive income may reduce the amount of Age Pension income.

3. You’ve experienced a shift in your financial situation.

A change in your financial situation, whether you’ve gotten a promotion or you’ve hit hard times financially, may influence your choice to sell before purchasing. In one case, a person’s financial condition may improve, causing them to upgrade. Alternatively, according to the best mortgage broker, a person may need to downgrade their home and pay off debts using the proceeds from the sale of their existing home.

The Best Mortgage Broker: What to look about when selling a home before purchasing another?

The advantage of selling a home in advance is knowing exactly how much money you have available for your subsequent acquisition. You might be able to put down a large deposit on a new home or pay for it entirely with this money. Thus, it can help you save money in the long run, especially if it pays for the home.    

There are additional costs to consider if you want to retain multiple properties. Multiple mortgage repayments with varying interest rates and taxes, various councils and water rates, and numerous ongoing repair and maintenance expenditures are examples of this.

However, if property values rise in the time between selling and purchasing, you may discover that your new funds are insufficient to get you where you want to go. Alternatively, if you’re seeking a new home loan and interest rates rise during this time, servicing the home loan may become difficult. In case you want to know which is the best alternative, contact with the best mortgage broker.

The extra benefit of maintaining a home for investment purposes is the potential for passive income. It utilises rental payments to pay down a new mortgage or supplement your income after deducting costs. 

How can I pay for a new property if I haven’t yet received funds from the sale of my old one?

Another typical stumbling block is what to do if you locate your dream home while still finalising the sale of your previous one. Cash flow and timing difficulties are regular occurrences.

Here the best mortgage broker asks to go for a bridging loan. A bridging loan may be helpful in this situation. It’s a type of short-term financing in which a lender gives the buyer the money they need to buy their next home. To determine how much you may be eligible to borrow, a lender will look at the outstanding balance of an existing home loan (if one exists) as well as the purchase price of the following property, including any upfront costs and fees. You can also refer to it as your’ peak debt.’ 

You can use the money from the current home sale to pay off the ‘peak debt‘. If the bridging loan has any outstanding debt (sometimes known as “end debt”), the mortgage for the new home may absorb it.

Borrowers typically have two options for bridging loans: open bridging finance and closed bridging finance. For example, property owners who want to sell but haven’t found buyers might use an open bridging loan. The Open bridging loans are for a 12-month term, and the seller must show proof that they are actively seeking a buyer. On the other hand, closed bridging finance may be suitable for individuals who have identified purchasers but are still finalising the sale, waiting on paperwork or settlement, and want cash to acquire another home as soon as possible.    

Whatever option you select, make sure you do your homework and match your financial objectives. Before making a choice, weigh all sides of the issue against your circumstances, such as approaching retirement or having a growing family.

At Nfinity Financials, we understand that moving from one home to another is a vital phase in most homeowners’ lives. Educated homeowners with a bit of planning can locate happy new owners for their properties and can step in to a new property  If you’re having trouble deciding, it’s a good idea to get assistance from the best mortgage broker. To get educated with the best finance options, dial ‘1300 GET LOAN’ or click here to contact the best mortgage broker in Sydney.