UK Properties advice:Sell Before You Buy

Sell Before You Buy

For the majority of us it is vital that we sell our old houses before we can start looking seriously at buying a new one, particularly if the purchase of your next property is reliant on the sale of your current one. Unnecessary expense can be caused if done the other way round.

Reasons for selling before buying

Many sellers will not let you proceed with the a sale if you are not in the position to and the house will remain on the market for other buyers to snap up.
You will be in a poor buyers position and may end up paying over the odds for a property that would have been cheaper if you had sold your own home first.
You may feel that you have to sell your house quickly in order to finance the new one that you have found and sell for a lower price than what could have been raised had you had time.

If you are selling first you must also be aware that you need to secure yourselves in case you do not find a new home within the selling time. The best way to do this is to agree with the interested parties that the offer is subject to you finding a new home and to let them know exactly what is happening so that they do not incur any extra costs.

If you cannot find a house within the given time-scale, there are three options for you:

Move into temporary accommodation - this will allow a few months to find a property that is completely right for you and does not let the other side down. You will also become a buyer that can purchase immediately. This will strengthen your buying power.
Negotiate an extension - if you could persuade the other party to wait a bit longer you may be able to find a property however do not get in the position where you feel rushed and under pressure to buy a house. The house has got to be right for you.
Withdraw from the sale - this is a final option that will be disappointing for your buyers however you must think of yourselves and be glad that you are not going to spend the rest of your life in a house that you are not comfortable with.

In the event that you do decide to buy first, the chances are that you will either have to lose that property because of lack of finance or take out a bridging loan to cover the cost until you can sell your own property.

There are two types of bridging loans :

Closed loan - It is used when contracts have been exchanged on both the sale and purchase but the exchange of money is in lieu. It is low risk for the lender and easy to obtain. It is a loan that is made for a set period of time. The finance on the loan is still very expensive despite being easy to obtain and it is not usually possible to add it to your mortgage.

Open loan - For use when no exchange of contracts has yet been made. It is much riskier for the lender as you may never be able to sell your property. They are hard to obtain and expensive.

Both of the bridging loans are best advised from your bank or mortgage lender.