Owning your own home is a fantastic milestone, but moving home is ranked as one of life’s most stressful events. And, unless you’re a first-time buyer, you’ll likely be trying to buy a new home while selling the one you currently live in.
So how do you buy and sell a home at the same time? Here are our top tips for managing the process.
The pros and cons of buying and selling at the same time
When you’re buying and selling houses, it often feels like things are happening on top of each other. Whatever approach you take, there are pros and cons:
Buying first and then selling
If you have enough money saved to pay a new deposit without selling your current home, buying first and then selling can be the most straightforward option:
- You can take your time to find a property that ticks all of your boxes
- You have the reassurance of knowing that you have time to find another property if you miss out on the first one
- You’ll only have to move once because there’s no deadline for moving out of your current property
On the other hand, buying first is much more expensive. First, you’ll have to pay a deposit on the new house while a lot of your money is still tied up in the old one. And, if you still own your current property, your new one will technically be a second home. This pushes up a lot of extra costs:
- You’ll need to pay a bigger deposit
- The mortgages you’re applying for might have a higher rate of interest
- You’ll have to pay a higher stamp duty tax (although if you sell your first house quickly, you’ll be able to claim this back later)
So if buying first and then selling isn’t financially feasible, you can always prioritise the other side of the process.
Selling first and then buying
The best thing about selling first is that you can use the money you make to pay the deposit on your new home.
The other advantage is that it might make it easier to get your offer for your new house accepted. If a seller knows your current home is already under offer, you become a more attractive buyer because, chances are, you’re going to make their experience less complicated.
But there are some drawbacks to selling first:
- You don’t have as much time to shop around for the perfect house.
- You’re more likely to become part of a property chain, where the person who’s selling you their house is also trying to buy (maybe even from someone else who’s trying to sell, and so on).
- You might have to live somewhere else temporarily while you look for a new home. This comes with the extra expense of rent, storage, and a second move.
The bottom line
It can be less stressful to buy first and then sell, but it’s not always possible. More often than not, you’ll probably be trying to sell your house first while looking for a new place to live.
So, let’s break the process down some more.
How to buy a house and sell a house at the same time
Step 1: finances
You need to know how much you could sell your house for, and you have to be sure you’ll be able to meet the asking price so that you can afford your new mortgage. Some sellers prefer to ask three different estate agents to value their home to get a more accurate picture.
How much you have to spend depends on three things:
- How much your current house sells for
- How much equity you have (in other words, how much of your mortgage you’ve paid off)
- How much money you owe on your current mortgage
When you have that figure, you’re ready to start buying and selling.
Step 2: find a buyer
While you look for a new place to live, you’ll also be showing your current home through an estate agent. Hopefully, you’ll soon have an offer that you’re happy to accept (and a place that you like enough to make an offer of your own).
Step 3: surveys and conveyancing
This is where many things start to happen at the same time.
For selling your current house, you’ll be waiting on the buyer to do their surveys. This is their business to organise, but you’re going to want to be helpful and make sure you’re there to let the surveyors in. For buying your new house, you’ll need to instruct your conveyancing solicitor to set up your surveys.
You’ll also need to approach your mortgage lender so that, when you have the go-ahead from everyone’s solicitors, you can organise the funds you need straight away. They’ll talk to you about the different possibilities – paying off your existing mortgage (possibly with an early repayment charge) and getting a new one or porting your existing mortgage (continuing to pay off the same loan on your new home).
It’s important to find out how long your mortgage offer is valid because, if the surveys run into problems, it might still be a while before you get your new keys.
Step 4: Pay your fees and set your dates
Unless you have to renegotiate prices or arrange repairs, you can move on to setting the dates when you’ll exchange contracts and complete the property sales. Once this is done, your old house belongs to your buyer, and your new home is yours to move into.
You’ll also have some bills to pay at this point. You’ll need to settle up with your estate agent and solicitor and pay stamp duty on your new home. And if your old home has increased in value while you were living there, you’ll have to pay Capital Gains Tax (a tax on the profit you make when you sell an asset, like property).
Tips and best practices for selling and buying at the same time
Buying and selling a house at the same time can get complicated. Here are our top tips for making the process smoother:
Research your estate agent and conveyancing solicitor
Although they don’t get paid until the surveys are done and the contracts are signed, you’d be surprised how many solicitors miss deadlines or don’t pick up the phone.
You want to know that you’ve got someone who’s efficient and who’s going to keep you in the loop. So get a recommendation from someone who’s recently sold a house or look at online reviews.
Consider putting a settlement contingency in your offer
When you make an offer, you can instruct your estate agent to add a clause that you’ll only move forwards with the purchase if you can sell your house by a certain date. This can make you less attractive to sellers who want to move quickly, but it gives you some protection from additional charges if a chain falls apart.
Try to do the exchange of contracts for the old house and the new house on the same day
This means that you’ll have the money in your account to pay the deposit on your new property.
Try to book the completion dates close together
Your life will be easier if the completion date for your old house and your new house are close together. As we said before, moving twice means paying twice, living out of boxes twice, and carrying your mattress up and down more stairs than you’d like.
Deal with the paperwork as soon as it comes in, and keep a close eye on your finances. Contact your solicitor and estate agent as soon as you have a question, rather than when you get impatient. And don’t do anything to hold up the chain. If you do, people will start to get twitchy, and it’s more likely that something will fall through.
Ask the experts
When you’re buying and selling at the same time, Habito can help.
We’re a whole of market mortgage broker, which means we can search deals from dozens of lenders to find the one that’s right for you. And, with our home-buying service Habito Plus, you can keep a bird’s eye view on the entire buying and selling process with your own personal dashboard.