Should I Sell My House Before Buying A New One?
When considering buying a new property, one of the most difficult decisions you need to make is what to do with your current home. Whether you’re looking to relocate overseas, downsize or move in with your significant other, you need to decide whether you will be buying a home before selling your old one.
If you’re planning on buying a new home, you can either sell your house before buying a new one, at the same time or after. In this blog, we look at the advantages and disadvantages of each to help you decide which option is best for you.
Selling a house before buying a new one
This involves a homeowner selling their home before completing the purchase of a new house. If you’re willing to rent short-term while looking for a new home, then you may be in a stronger position to negotiate as you’re not in a rush to buy.
Some of the other benefits of selling your house before buying a new one include:
- Cash in the bank: Selling your property before buying a new one means you have instant access to equity, so you’re not dependent on a house chain or loan to proceed with a purchase.
- Time to spare: Selling your home means you have the funds readily available to purchase a new one, so you don’t have to rush to complete a sale or accept a low offer on your current property.
- No reliance: Selling your home before looking for a new one means you’re not dependent on the sale to move forward. This means you can put an offer down as soon as you find a home you like, as you’ll know the exact budget you have to work with.
While there’s plenty of advantages to selling your home before buying a new one, there are drawbacks that you need to take into consideration. For example, homeowners may be concerned that they will end up homeless, or end up indefinitely renting while they look for a new home. Some of the other disadvantages to selling before buying are:
- Waiting game: If there’s no properties on the market that meet your requirements, you may not be able to buy as quickly as you would like. This means you could end up renting for longer than planned, which may prove to be costly and disheartening.
- Rising property prices If you sell your home as house prices are rising but you’re looking to buy a new property fast, then you may end up having to pay more than you would have liked.
Selling a house at the same time as buying a new one
Most homeowners choose to sell their home at the same time as buying a new one, which enters them into a property chain. Although property chains can be risky, they are helpful for homeowners who cannot afford to buy a new house before selling their existing one. Other benefits of selling a house at the same time as buying a new one include:
- Possibility to buy and sell: Many homeowners cannot afford to buy a new property outright. A house chain allows homeowners to sell their old property and use the funds to cover the cost of their new property.
- Streamlined process: Rather than homeowners having to go through the complicated buying and selling processes on two separate occasions, they can be combined to save time. Although a house sale and purchase can be time-consuming and costly, homeowners will have the reassurance that once it’s done, it’s done.
- Coordinated timing: One of the benefits of being in a house chain is that nobody has to move in or out until they are ready. This is because each house purchase is reliant on the preceding and succeeding sales.
Although selling a house at the same time as buying a new one has its benefits, there are also disadvantages you need to take into account. These include:
- Risk of broken house chains: Because house chains are reliant on the preceding and succeeding transactions, all it takes is one person to pull out for the entire process to fall through.
- Duration of sale: Once you are part of a house chain, you are reliant on other homeowners and their solicitors to complete the sale quickly. If there are any delays caused by surveying or exchanging contracts, you could be stuck waiting to move for a long time.
Selling a house after buying a new one
While selling your house after buying a new one means you have more flexibility and stability overall, it could be costly in the long term due to the tax implications of selling a second home.
The greatest benefit to selling your house after buying a new one is the reassurance that, regardless of how long it takes to complete the sale, you still have somewhere to live. Some of the other benefits include:
- Avoiding house chains: Since you already own a property, you don’t need to rely on a house chain to sell your old home. This means you’ll be free from the emotional and financial impact of a broken house chain, which can leave people wondering where they are going to live.
- Avoid renting: Since you own a property, there won’t be a gap between selling your house and moving into another. Therefore, you’ll avoid the cost and instability of having to rent while you wait to move into your new property.
- Reduced stress: Unlike homeowners that must wait for their current home to sell before completing their purchase, you’ll avoid the stress and uncertainty that reliance on a sale can cause.
While selling your old property after buying a new house can be beneficial, it’s not an option for the homeowners who need to release equity from their current home before buying a new one. Some of the drawbacks of doing this include:
- The cost: Unlike a house chain where the cost of your current home typically covers the cost of your next, you’ll need to be able to finance your new home outright. This isn’t an option for most homeowners, unless they have savings or have inherited a lump sum.
- Tax implications: Alongside capital gains tax, you’ll be subject to expensive stamp duty as you own a second property. If you keep this as a second home and it remains empty for more than six months, you may also be subject to higher council tax rates.
Deciding whether you should sell your house before buying a new one can be a daunting task and it’s important to make sure that you understand the advantages and disadvantages of each option before making a decision. If you’re looking to sell your house fast, you may want to consider selling through a regulated property buying company like Good Move. We will buy your house for cash in as little as two weeks, regardless of its condition. If you’re looking for a quick property sale, contact our experienced team of professionals today.