Advice matters
Thinking of buying your next home?

Looking at buying your next home? You’re probably making some pretty important decisions, including whether to buy first or sell first. From a mortgage standpoint, you may also like to explore your options to ensure a smooth transition.

So, here are some key things to think about, according to our SHARE advisers.

Selling first or buying first

Ready to make a move and start the house hunt? Just like buying your first home, purchasing your next one can be equally exciting and challenging.

One of the first key steps is to decide whether to buy or sell first. Ideally, you’ll want to ‘synchronise’ the two transactions, but that’s not always possible. For example, what if you receive a great offer on your property before you’ve found a new place to move into?

The choice between buying and selling first depends on your circumstances, and both options come with pros and cons.

Buying before selling often happens when people find the perfect home (or at least a good bargain) and put in an offer to snap it up before their own house has sold. This may not be possible for everyone. To buy before you sell, you’ll need to come up with the deposit money, and that may not be easy if you can’t free up the equity you’ve built in your current home. Plus, it may take a while before your existing house sells, meaning you could be paying double for a while – including two mortgages, two home insurance policies, and so on. And lastly, what if your home doesn’t sell for the price you expect, especially if you have to sell it fast?

Selling before buying could be a safer option (provided you can’t buy and sell at the same time, which is preferable). Once you’ve sold your own home, you’ll have a clear idea of how much you can afford to spend on your next home. However, once again, it could take you a while before you find the right property to buy. And in the meantime, you might have to look for a short-term accommodation – which can be quite expensive – while also having to park your furniture in a storage facility.

Buying and selling at the same time, if at all possible, is preferable in most cases. If you choose to go down this path, it’s a good idea to ensure that your house is sale-ready before starting. There might be small repairs to do here and there, of course, but completing bigger jobs in advance means you’re ready to put your home up for sale when the need arises.

Assuming you’re ready and you find your prospective ‘next home’, you can put in an offer, conditional on the sale of your property by the unconditional date (the date that you confirm you have the finance and satisfied the other conditions to be able to proceed to complete the purchase on the settlement date). If you don’t have an agreement for sale on your house, you may not be able to go unconditional, which would mean not being able to purchase the house.

Moving your mortgage

Do you have a mortgage on your current property? If so, you may like to know what your options are in this space. Our SHARE mortgage advisers are here for any questions you may have, so please don’t hesitate to contact us.

Broadly speaking, it’s common among Kiwi vendors to repay their current mortgage in full (with the sale money) and take out a new one. However, this option may not be suitable for you if you’re on a fixed mortgage rate, as you may incur repayment fees (or break fees). If you’re not in a rush to move, you may wait until the fixed rate expires and then stay on a floating rate until your house has sold.

Alternatively, to avoid break fees, save time and keep the same terms and conditions you currently have, you could transfer your existing mortgage to your next home. Get in touch to learn more.

Lastly, a few words about bridging finance. A bridging loan is a short-term loan that allows you to buy your next property even if you haven’t sold your current home yet. Again, timing and affordability are crucial: bridging loans are usually set on a higher rate than advertised fixed rates and are subject to the affordability of the borrower(s).

Need help?

As you can see, there a lot of moving parts and things to think about. Like to explore your mortgage options in more detail? Get in touch – our SHARE advisers are experts in their field and happy to help. Click here to find an adviser near you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.