Seven factors will influence whether you buy or sell first

With our property market in transition, recording six months of consecutive growth, many owners with medium-term plans to sell are now asking two key questions.

Is it the right time to move? And if I’m ready to take the plunge, should I buy first and then purchase or vice versa?

While upgrading your property can be exciting, some decision making can be a little stressful. We believe the best way to weigh your options is to view your financial situation realistically.

If you can afford a bridging loan that would allow you to buy first and then sell, this is a realistic option.

Be aware that bridging loans have a higher interest rate than standard mortgages, and they can blast a hole in your budget if your current home takes longer to sell than anticipated.

A strong market limits the risk, but it’s a different story when buyers show some caution. A deal may take time to come through, and you may have to be flexible on price or conditions.  

This checklist may help you when considering whether to buy or sell first.

Buying First

Risk equation: If you buy first, you should be confident you’ll sell your current home on schedule and at the anticipated price. 

Back-up cash: If events go sideways, you’ll likely need a bridging loan to tie you over because you’ll own both properties in this scenario.

Rent option: With no sign of a buyer, you can rent to generate income to help cover the bridging loan costs. If this works, you can delay a sale until the market picks up further.

Selling first

Safety first: You limit your risk by selling first, and you’ll know exactly how much you can spend on your next home.

Timing is everything: You’ll have some control over events, influencing the settlement time to suit your needs. You can even ask your buyer for an extended settlement period to allow you time to find your next home.

Nowhere to go: Life isn’t always perfect. Just because you sold first doesn’t mean you’ll find your next home quickly. Rather than rush into a purchase, be prepared to rent while you complete your search. However, with Australia experiencing a shortage of rental properties, that’s an additional challenge.

Exiting the market: The property market moves quickly, and you could find yourself scrambling if there’s a sudden upturn. The worst outcome is discovering you can no longer afford the style and size of property you’d set your heart on.