Options to buy and sell

As the property market continues to surprise, you may be considering selling your current home.

Since most homes currently have a great deal of equity, I wanted to share some information regarding key considerations when buying and selling.

Specifically, I wanted to outline the three main options available for :

1.      Using your home equity toward your next property purchase,

2.      as well as the importance of securing pre-approval.

When using equity, you have three options:

Option 1: Buy and sell simultaneously.

This involves buying your next home conditional on the successful sale completion of your existing home. This requires good communication between the buyers of your current property and the sellers of your new property. A good agent can help ensure all parties agree to this requirement, protecting you from an awkward situation.

Option 2: Buy now, sell later.

This option requires bridging finance, which allows you to buy now and settle as soon as possible.

You would initially borrow the full purchase amount plus costs (the peak debt), then sell your existing property later (usually within 12 months), and use the proceeds to pay out the bridging loan (end debt).

- Advantage: The main advantage is securing the right property quickly, especially in a rising market, and easing the moving process.

- Considerations: This involves interest costs, the time pressure of selling, and the risk of accepting a lower price to complete the process.

- Note on No End Debt Loans: If you buy for less than you are selling (e.g., downsizing or retirement), applications are often streamlined and approved quickly, even for applicants with low or $0 income, as there is no ongoing loan required.

- Note on End Debt Loans: If you will have an ongoing loan balance, you must be able to demonstrate continued income to service that debt.

Option 3: Sell now, then buy when ready.

This is often a more methodical and stress-free way to proceed.

It gives you more time to find the best place to live, especially when moving to a new area or city, with the cash secured and pre-approval ready.

Additional option: reverse mortgage:

·        if you are over 55, then why not stay where you are, don’t sell or move, and borrow against the increase in your home equity.

·        Avoid the large costs of buying ansd selling, and stay in the home you love

·        For more information: https://mvpreversemortgages.com.au/ 

The importance of Pre-approval:

Even with existing equity, it is important to ensure your financials are in order as this is a new loan application.

Common issues that can arise include problems with credit checks, job changes, unpaid bills, or overdue taxes.

It is highly recommended to get the go-ahead from your broker to be sure there are no issues.

What is a pre-approval?

We submit all the necessary documents to the bank (pay slips, statements, ID, etc.) for initial assessment. This means you are approved as a potential home loan customer. Once you find the right property, the bank only has to approve the property itself.

Pre-approvals are free, obligation-free, usually last up to 90 days, and significantly speed up the entire buying process.

Benefit for you: You gain more BARGAINING POWER as you are now a serious buyer, ready and prepared to act quickly.

Less stress: You are closer to unconditional approval, often subject only to a bank valuation.

It is still important to sign the contract with a 7-14-day finance clause.

Please let me know if you have any questions about these options or would like to begin the pre-approval process.