Upsizing to a Bigger Home: Sell First or Buy First?
You've experienced the excitement of buying your first home and settled in well. While your first home is always precious, certain circumstances have driven you to upgrade to a new home. Maybe you are in need of a larger space, but upgrading to a bigger home is not as simple as it sounds. It often comes with sustainable planning and strategic decision-making. The most common confusion you will be facing would be whether to sell your current home first or keep it until you buy your new home and then sell it later. Both scenarios come with their own pros and cons. We have weighed both options for you and prepared a list of pros and cons of both selling your current home first and buying a new home first. If your financial circumstances permit, you can also opt to keep your existing home as an investment property. There are benefits to both selling and keeping the property.
Benefits of Selling
By selling your current home, you will end up with a large amount of money. Having such a substantial amount of money will allow you to make an informed decision. You will be able to analyze your affordability while being mindful of your next large mortgage.
Benefits of Keeping an Investment Property
Instead of selling your current home, you can keep it as an investment property. Doing so will not only benefit you with rental returns and tax deductions but also with capital gain that rises over time.
Sell First or Buy First?
The ever lingering question while upgrading to a bigger property - should you sell your current property first and buy your new home later or buy your new home first and sell your current property later? Each of the approaches has its own pros and cons.
Selling your Home First
- If you sell your current property first, you will have the exact amount of money you can put in to purchase your dream house. You will have peace of mind knowing how much you can afford to spend on your new home.
- By selling your property first, you have a better chance of maintaining financial security. Often homeowners make the mistake of overestimating the selling price of their current home. When you sell your existing home first, you'll have a clear idea of your finances, eliminating the possibility of overextending yourself.
- Sometimes the timing might not go as you planned. After you've sold your current home, you might not be able to shift into your new home. During this transition phase, you will need to find temporary living arrangements.
- Under such circumstances, you will need to rely either on short-term renting or on the kindness of your family or friends.
- Shifting to temporary renting space leads to packing and unpacking more than once, and you might also end up adding extra utility fees to your finances.
Buying your New Home First
- If you buy your new home first, you can move into it right away. You will not have to make other living arrangements and go through the trouble of packing and unpacking more than once. This will prevent you from a lot of trouble, especially when you've children and the elderly with you.
- With buying your home first, you can buy your perfect home as soon as it becomes available without being tied down by the requirements of selling your current home first.
- With both your old home and the new one, you will be paying on two mortgages and might often lead to the pressure of selling your old home.
- Because of uncertain financial status, you might be required to sell your old house at a lower sale price, leaving you even more financially vulnerable.
- Sometimes, your old home might take longer to sell, leaving you with two mortgages to attend to and might jeopardize your financial standing.
Well, upgrading to a bigger property from your current home often comes with challenges. Having an experienced mortgage broker by your side will help you make a purposeful money decision. Contact our Nepali mortgage brokers for expert advice while upgrading to your bigger home.