Buying a home may be the biggest purchase and investment you’ll ever make. If and when you choose to buy your next home, it will be a slightly different experience but just as important. There’s more than one way to go about selling your first home and buying your second. Here are some of the things to consider when deciding the best way for you and your family when it comes to selling your first home and buying your second:
Can I Buy Another House Before I Sell My Own?
Many Real Estate agents would advise that you selling your first home and buying your second has to a planned move and can come with some risks if you buy before you sell. If you don’t feel you’re in a position to carry two mortgages or you’re not comfortable with the uncertainty of timing your two transactions, selling your current home first may be best for you. The security of knowing your moving date and knowing exactly how much money you have for your next downpayment can bring you a lot of peace of mind.
If you find your next dream home and can’t pass up the opportunity of putting down an offer, you can consider making an offer which is contingent on you selling your current home. In a hot market, this might be challenging as those who are able to make an unconditional offer have the upper-hand.
You may have less help
If you choose to purchase your second home before you sell your current home, of course, you’ll need to come up with a downpayment without the money from the sale of your current home. During your first home purchase, you may have benefitted from the programs or rebates that were available to help you save or come up with money.
During your first home purchase, you may have taken advantage of the Home Buyers’ Plan which allows you to withdraw money from your registered retirement savings plans to buy or build a home. As this won’t be available to you on your second purchase, you will need to consider where your downpayment will come from.
You may have equity
If you choose to sell your current home before you purchase your second home, or if you take on the challenge of timing a simultaneous buy and sell, you will have equity to use as a downpayment for your second home. This equity will be a combination of your original downpayment and any principal you may have paid down during your homeownership.
Keep in mind that your current house may have even appreciated, so you may be coming out of this sale with quite a bit of a cushion. Having this money for a downpayment can significantly decrease your stress as well as position you to afford a home you really love. If the money from your sale is enough for a 20% downpayment on your next home, you will even be able to avoid costly mortgage insurance on your next purchase.
You have gained wisdom
One of the greatest assets you now have after purchasing your first home is the wisdom and knowledge gained from the complicated and detailed experience. Having fewer unknowns during your second home purchase will surely grant you a more peaceful and less stressful second purchase. Not only will you understand the process of paperwork, lawyers and regulations, during your second home purchase you will have a much better idea of what you are looking for in a home.
During your second home purchase, you will also be able to plan for what may have seemed to be unforeseen costs during your first time around. Perhaps the most reassuring thing you will come into your second home purchase with is having found a real estate agent you really trust, which is guaranteed to make your selling and buying experience easier.
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If you are seeking advice on buying a home, more information about buying your second home, or have more questions for us, we are happy to provide you with helpful guidance and support. Email us at info@buyandsellottawa.ca or call us at 613-590-3036.