Arranging a Simultaneous Settlement
Moving into a new home?
As a homeowner, the first common dilemma you face while upsizing or downsizing is either to sell or buy first.
However, there is a third option that you can approach - Simultaneous Settlement.
Most homeowners do not prefer to sell their old property before moving into their new one while many cannot afford to buy a new one before selling their existing property. The simultaneous settlement allows you to sell your old property just at the same time you buy a new one. There are factors that come into play while doing so, and each needs to be weighed carefully. The process isn’t simple or straightforward and also comes with multiple pros and cons.
Advantages of Simultaneous Settlement
- With the simultaneous settlement, you will not have to take a bridging loan. While bridging loan covers the cost of buying your new home as you wait on selling your existing one, you’ll also be paying off two mortgages.
- If you settle both your property simultaneously, you will not need to move to temporary accommodation, this saves you the rent you’d have to pay.
Difficulties in Simultaneous Settlement
- The simultaneous settlement is difficult to execute and involves complex financial and legal processes.
- It might require you to sell your property for a little less value and buy the new one for a little more value so as to incentivize both parties.
- Things might get complicated if one of the other parties is also involved in the simultaneous settlement.
- As it involves two settlements relying on each other, any delay in one of the settlements might raise problems resulting in penalty fees or even loss of the deposit on your new home.
Buying House Before Selling
Often, situations might lead you to buy a new property before selling your current home. Be it to relocate to a new state for a new job or you just found your dream house with a good deal. Unless you are financially capable, buying before selling often comes with a disadvantage. You’ll have to arrange bridging finance and end up paying loans for both properties. In order to avoid this loan, you’ll have to sell your existing property before finalizing the purchase of the new property.
Selling House Before Buying
In comparison to buying first, selling a house before buying is more advantageous. Selling first gives you the benefit of the less pressurized sales. Adding to it, you can take your time selecting your new property and even determine your exact capacity to afford your dream house. You can also ask for a contingency period giving you more time to buy your new property. If you cannot find the property you are looking for within the timeframe, you can even cancel the sale.
Selling before buying also comes with disadvantages. If you cannot find a new property after selling your existing one, you will have to arrange temporary accommodation.
How to Sell and Buy at the Sametime?
Well, buying first or selling first has its own pros and cons. Keeping the circumstances in mind, selling and buying at the same time, is possible but comes with tedious paperwork and requires perfect timing. Here is what you can do:
- Arrange for pre-approval to purchase a new property on the condition that you will sell the current property
- Arrange for existing property to be placed in the market for sale. You need to seek help from the real estate agents and the conversation shall begin as soon as you start discussing with the broker
- While your current property is being opened for inspection to prospective buyers, you can start looking around for the new purchase
- If you receive an offer for the property being sold, then it is a good idea to put the offer for the property being purchased
- Please make sure that you put in a new offer only after your current property goes past cooling off period. Until then, chances are that the purchasers can walk away from the deal. Well, you don’t want to put your deposit in a new purchase without confirming the sale of your existing property. Cooling off confirms the sale.
- You will need to speak with a mortgage broker, then with the conveyancer and the selling agent as to how many days you put on your sales contract and how many days on the purchase contract.
While we have simplified the process as much as possible for you, it still requires a lot of work effort. When you buy and sell houses, it is always a smarter choice to have experienced mortgage brokers look into the paperwork for you. To have professional assistance, Book an appointment now and talk to one of our experienced brokers!