If you are looking to buy a new home and sell your
existing home you've most likely wondered whether you should
buy or sell first.
There are several things to consider when making this decision
so you are best prepared for the journey. In part two here
we'll look at things to consider when buying first.
There is less pressure to just 'get' a
new home so you can settle on time – you can really shop
Bridging finance may be required if you do not
sell your existing home in time for settlement
You have greater certainty that you will only
have to move once
You won't have a clear budget for your new
In a quickly rising market you may be able to
achieve a higher sale price and secure a better price on your new
You will need to ensure you have a cash deposit
sufficient to cover the purchase or be prepared to obtain a deposit
When buying a property, first you will need consider options for
payment of the deposit. The traditional method of payment of a
deposit is cash. However, when cash is not available like when your
equity is tied up in your existing home, a deposit bond maybe a
There are private companies that issue deposit bonds and banks
can issue the equivalent being a bank guarantee. Each issuing
institution will have different fees and criteria so you will need
to investigate these and ensure you comply.
Your conveyancer and mortgage broker can assist in this
When buying first your ability to cover the mortgage of two
properties will be a main consideration. Bridging finance is an
option worth discussing with your mortgage broker. Bridging finance
shorter terms of between 6 and 12 months;
fixed and variable rates are typically still offered;
higher interest rates; and
Lenders Mortgage Insurance may still apply if the loan is more
than 80% of the total value of both properties.
As noted above, a longer settlement period of approximately
10-12 weeks (or longer if you are moving to an area where
properties are scarce) maybe a necessary consideration.
The downside of an extended settlement is you may need to accept
a sale price that is lower than you originally expected in order to
sell in time to achieve settlement.
Contingency Plan – Conditional Purchase
A last resort to overcome the cons is to make your purchase
dependant on the sale of your home. As noted above, this can be
negotiated be your conveyancer or solicitor. Keep in mind that a
vendor does not have to agree to this request.
If settlement of both your sale and purchase have been timed
perfectly there are some last minute considerations that need to be
covered to ensure settlement goes well.
Timing for final inspection
When buying property you are entitled to a final inspection of
the property within 48 hours prior to settlement. This is also
relevant for the people buying your property.
Timing for settlement
If settlement has been timed perfectly it will occur at the same
time on the same day. Otherwise, settlement may need to occur a few
days apart to allow funds to clear and cheques to be drawn.
Settlement is most likely going to occur after 2pm as many banks
have this requirement.
Do you have to attend settlement – the short answer here
is no. Your solicitor to conveyancer will arrange attendance by a
settlement agent on your behalf.
Timing for moving out/moving in
So, settlement has been set for the same time on the same day.
Great news – you only have to move once.
Now it is time to co-ordinate moving. The best option tends to
be hiring a removalist with a truck large enough to fit all of your
furniture and possessions in, in one go. This will allow you to
pack up and vacate the property easily prior to settlement.
Moving into new property including the collection of
Once you have moved out of your old home, you will be waiting
for the keys to move into your new home. In order for you to
collect the keys , your solicitor or conveyancer will call the
agent and let them know settlement has been finalised, this will
happen within 30 mins to 1 hour of the set settlement time. This
call will enable the agent to release the keys to you and you will
finally be able to move into your new home.
If an owner wants to remove a caveat, issuing a lapsing notice is a quick and easy way to shift the problem to the caveator.
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