Moving can be stressful, add buying a new home and selling your old home, and it can be particularly challenging. Before starting the process, you may wonder should I sell my home before purchasing another home, or wait until I find the home I want. Good question and we’ll try to assist you in coming up with an answer.
If you sell first, you have to be prepared that you may not find the house you want right away and may need to rent. Renting may be an option, but it would need to be short term and if you have children, you have to be in the same area as their school.
If you buy first, you have to ensure you have the capital and money to carry both mortgages. If you don’t have the money or a line of credit to cover in the short term, you could get a Bridge Loan to cover owning both properties. Bridge Financing (or Interim Financing) uses the equity of the home you are selling and the loan is paid when you sell the home. Equity is determined by taking the price of the home you are selling and deducting the costs to pay off all current mortgages or secured lines of credit (including any prepayment penalties), real estate agent commissions for selling the home, and legal fees for the lawyer to complete the sale transaction. If your house does not sell, you could be stuck for a while. In a seller’s market, this may not be as risky, but the housing market in Canada is beginning to cool. The summer months had higher than expected housing sales due to talk of a mortgage rate hike, but started to slow down in October. Market analysts’ are predicting a slow down in sales. If you home is on the market too long, you may have to reduce the price and that is something that needs to be factored in the decision also.
Speak to your Mortgage Broker about the various options, housing market outlook for 2013/14 and pro’s and con’s of each option. The good news is you may not have a good mortgage rate on your old home, and this may be an opportunity to get a better mortgage rate.
We hope we’ve assisted in answering some of your questions to help you make a good decision.