So, you’ve outgrown your first home and you’re dreaming of more space, a better location, or a backyard for the dog. But now comes the tough part: should you sell your current place before buying the next, or buy first and sell later?
This is one of the most common dilemmas for Aussie first-home buyers turned next-home hopefuls — and it can feel overwhelming. The good news? There’s no one-size-fits-all answer, understanding the differences between each option may help you prepare for conversations with your broker or legal adviser.
The Buy First vs Sell First Dilemma
When it comes to upgrading, both paths come with pros, cons, and a fair bit of coordination. Here's a quick breakdown:
Sell First
- Pros: You’ll know exactly how much you’ve sold your current home for, making it easier to set a budget. The sale proceeds may form part of your available funds for a subsequent purchase, depending on your circumstances
- Cons: You may need to rent short-term or crash with family if you haven’t found your new place by settlement. That can mean double moves and extra costs
Buy First
- Pros: You can take your time to find the perfect home and move without feeling rushed
- Cons: Some buyers who purchase before selling explore bridging finance to manage the timing gap
What’s Bridging Finance and Is It Worth It?
If timing becomes an issue, some borrowers consider bridging finance, subject to lender criteria and their financial situation. It covers the gap between buying and selling, usually for 6 to 12 months, and is often interest-only during that time.
It’s not for everyone, though. You’ll need to show you can manage both loans temporarily. Lenders typically assess factors such as expected sale proceeds and timing. A real estate professional can advise on market conditions and a broker can help you understand how different lending scenarios may affect your borrowing.
How to Decide What’s Right for You
Here are a few questions to guide your decision:
- What’s your risk tolerance? If the idea of owning two homes at once makes you sweat, selling first might feel safer
- Is the market hot or cooling? Market conditions can influence buying and selling timelines. A real estate professional can provide insights into current local trends
- Do you have financial wiggle room? Your financial position will influence which options are viable. A broker or financial adviser can help you understand how each scenario may apply to you
A Real-World Example
Lisa and Mark in Brisbane used bridging finance to buy their next home before selling. With their third baby on the way, they didn’t want to miss out on the right property. Their broker helped them secure a bridging loan and settle both homes just ten days apart, no rental limbo, no regrets.
NOTE: For some borrowers, bridging finance may assist with timing between transactions. Outcomes vary depending on individual circumstances
Take the Next Step With Confidence
Buying and selling at the same time can be a juggling act, but you don’t have to wing it.
Download the free First Home Buyer e-book to get the full roadmap for upgrading to your next home. Inside, you’ll find step-by-step guidance on selling and buying timelines, how bridging loans really work, and how to use your equity as a springboard. Think of it as a helpful resource to guide you through the key considerations involved in buying and selling.
