Buying a house before having sold your own is sometimes necessary when you want to change your city, your residence, or quite simply when you have a crush. But how to undertake this operation? What are the advantages and risks involved? Our experts take stock and give you their advice.
Summary
What are the advantages of buying a house before selling your own?
Buying a house before you have sold your own has a number of advantages. Making this choice allows in particular to:
Choose your new home without pressure
Since you still live in your current home, you have no pressure to choose your future home. Therefore, you have time tostudy several offers, conduct the necessary negotiations and get a good deal. This can help you avoid the mistakes that a lot of buyers make because of the rush.
Take the time you need for your move
We all know that moving is never easy. It is best to undertake it without being pressed for time. This avoids breakages and oversights due to haste. It is above all the key to moving into your new home in the best possible conditions.
Facilitate the sale of the current house
Many buyers have struggling to project into a dwelling that is still inhabited. Emptying your house before visits can therefore be very useful. These will also be less embarrassing, and your chances of making a sale will be higher.
Buying a house without having sold your own: What are the risks ?
If you have chosen to buy your new home before having sold the one you currently live in, be aware that this operation also presents certain risks. The largest of them is not finding a buyer in time.
The situation can be even more complex if the loan on your first home is not fully paid off. You will then be required to pay two monthly installments over several months. Which, of course, can hurt your finances.
In addition, due to fluctuations in the real estate market, you do not need to no guarantee regarding the final sale price from your home. There is indeed a risk of a discount which can upset your personal forecasts.
How do you match the sale of your current home with the purchase of your new home?
To avoid the repercussions of an early purchase of your new home, it is ideal to have the two transactions coincide. To do this, simply take advantage of the latency period between the sales agreement and the final act of sale.
Indeed, when the seller of a property gives his agreement for a sale, a sales agreement is signed between the two parties. The final deed of sale is only signed upon payment of the amount of the transaction. The law does not really impose a time limit between the two signatures. But tacitly, this usually varies between 8 and 16 weeks, or even more.
The ideal is therefore to start your search for a buyer as soon as you sign the sales agreement for your new home. If you find one in time, it is possible to proceed to both signatures on the same day. You sell your current home in the morning and become the owner of your new home the same evening.
In addition, it is also possible to offer the integration of a suspensive clause to the sales agreement for your new home. This will indicate that the sale will only be completed if your current property is sold. Of course, the seller is free to accept it or not.
What are the credit options for buying a house before selling your own?
To buy a house before having sold your own, it is also possible to subscribe to one of the following financing solutions:
The purchase-resale credit
The purchase-resale credit is a solution little known to the general public, but which can be very advantageous. It allows you to immediately acquire your new home while controlling your debt ratio. With this solution you have up to 2 years to sell your current home.
The principle is simple: the bank buys back the current mortgage for your current house and grants you a loan to buy the new house. A new repayment schedule with a single monthly payment is then offered to you.
The bridging loan
The bridging loan is a short-term credit solution implemented over 12 to 24 months. As its name suggests, it allows you to bridge the gap between your current mortgage and that of your new home. The bank provides you with a capital corresponding on average to 70% of the value of your current house to finance the new home.
During the term of the loan, you only pay the interest on the loan. Once the sale of the old house is complete, you pay the full amount borrowed to complete the loan.
To conclude
Buying a house before having sold your own is therefore indeed possible. However, to control the risks, such a project must be the subject of a bone reflection and of a good financial package. Do not hesitate to seek the services of a real estate advisor to assist you.
Read also: How long does it take to buy real estate?
