nicolac34 Posted November 21, 2013 Share Posted November 21, 2013 I just wondered what the process was for buying another house before you've sold your current house is? So, for example, if you needed $50,000 deposit and $25,000 stamp duty to purchase your next house, but this $75,000 was in equity in your current house - do you need to sell your current house (and therefore be left with no where to live) before you can put an offer on and settle on a new house? How do the banks view your current house equity before you've sold? We want the next move to be the right one, and don't want to be in a position whereby we have sold our house and are then rushed into finding something else. Link to comment Share on other sites More sharing options...
Irishgirl1 Posted November 21, 2013 Share Posted November 21, 2013 Hi Nicola, you could get your current house valued and if you are looking for something new and find something you love you can put your offer in with the condition of you selling your other house, I know people have done that There is also a Bridging Loan which you can use, not exactly sure on the details but if you look at google or the banks they will give you all the info As for the equity in you current house if you have enough you may be able to use that as a deposit on a new one, but would you be looking at keeping the the old house as an investment or selling straight away? Good Luck x Link to comment Share on other sites More sharing options...
nicolac34 Posted November 21, 2013 Author Share Posted November 21, 2013 Thanks Irishgirl, we'd be selling our current house I think, I don't think we'd be able to afford two mortgage payments even if we did rent it out as the rent wouldn't cover it. Link to comment Share on other sites More sharing options...
Rupert Posted November 21, 2013 Share Posted November 21, 2013 I just wondered what the process was for buying another house before you've sold your current house is? So, for example, if you needed $50,000 deposit and $25,000 stamp duty to purchase your next house, but this $75,000 was in equity in your current house - do you need to sell your current house (and therefore be left with no where to live) before you can put an offer on and settle on a new house? How do the banks view your current house equity before you've sold? We want the next move to be the right one, and don't want to be in a position whereby we have sold our house and are then rushed into finding something else. Most people would line up the two transactions to happen at the same time. Buying and selling on the same day. Bridging loans are risky, you don't know how long you might be stuck with two houses. Better to line up if you can. Link to comment Share on other sites More sharing options...
Xenon4017 Posted November 21, 2013 Share Posted November 21, 2013 You should speak to your current lender. Clearly, there are provisions for this kind of thing, involving lending you more money temporarily to cover the costs of changing house. For the time between settlement on your next house, and settlement from selling your current house, you will have a bigger loan, therefore more interest to repay. Obviously, most people want to limit this overlap to the shortest period possible. Thus, there can be a chain of transactions, each one dependent on the next. This brings it's own joys when someone in the chain drops out. But see your bank. Ask them what they would lend based upon your current debt and repayment history. Link to comment Share on other sites More sharing options...
nicolac34 Posted November 21, 2013 Author Share Posted November 21, 2013 Ideally yes, it would all line up and complete at the same time, but I wanted to get an idea of what would happen if ours took a bit longer to sell. Thanks Xenon, I will speak to our lender, I'd just heard that you couldn't count the equity in your current house until you'd sold it as a deposit/funds for your next one. Link to comment Share on other sites More sharing options...
Rupert Posted November 21, 2013 Share Posted November 21, 2013 Ideally yes, it would all line up and complete at the same time, but I wanted to get an idea of what would happen if ours took a bit longer to sell. Thanks Xenon, I will speak to our lender, I'd just heard that you couldn't count the equity in your current house until you'd sold it as a deposit/funds for your next one. It is a negotiation, with the person you are buying from. Often they wait, whether they will wait and for how long, will depend upon the market. Link to comment Share on other sites More sharing options...
Xenon4017 Posted November 21, 2013 Share Posted November 21, 2013 Ideally yes, it would all line up and complete at the same time, but I wanted to get an idea of what would happen if ours took a bit longer to sell. Thanks Xenon, I will speak to our lender, I'd just heard that you couldn't count the equity in your current house until you'd sold it as a deposit/funds for your next one. I hate the word equity. Especially when I hear phrases like "we used the equity from the first house to buy the second". What they mean is "We risk losing both houses if we fail to keep up repayments on either". Think of equity as the money you no longer owe to the bank. Until your house sells, you're not quite sure how much there is. There's a lot of threads from new migrants who are at the stage of buying their first house in Oz, having sold their house in the UK anf rented for a while. As someone without a house to sell, such buyers are in the driving seat. I always advise them to use this power to their advantage. You are in the next stage; hoping for an unencumbered buyer to snap up your house in the time frame of your choice. Easier said than done, depending on the market. Still, at least you can get your ducks in line with the bank first. If you've got good credit history normally they are very keen to drag you in deeper. I mean, assist you in this stressful time. Link to comment Share on other sites More sharing options...
Keith and Linda Posted November 21, 2013 Share Posted November 21, 2013 You really need to speak with your lender and check out a couple of others too. Some banks will defer the bridging loan interest until you sell, this then effectively gets paid out of the equity, and your current outgoings remain the same, as Rupert says it is a costly way but if contracts are exchanged then you and your lender know the time frame, if you do not have contract on your sale yet then it becomes in the realms of the unknown which is risky for you and the lender. Speak with your lender and others, and I would say directly with them rather than through a broker. (personally speaking) Good luck Link to comment Share on other sites More sharing options...
Keith and Linda Posted November 21, 2013 Share Posted November 21, 2013 Equity in reality, for most folks just moving home, just becomes part of the equation in calculating how much mortgage you can have/want/need/afford. whether this be increasing or decreasing your current mortgage. Link to comment Share on other sites More sharing options...
nicolac34 Posted November 21, 2013 Author Share Posted November 21, 2013 Thanks everyone. It's just an idea at the moment, probably won't look at moving for another year anyway, want to build up some savings and do some work to the current house. Got my parents moving out shortly, so maybe could go down the route of selling first and then buying - this avoiding expensive bridging loans and removing any doubt over what we've got to spend in the mean time. I wouldn't want to over stretch ourselves. Link to comment Share on other sites More sharing options...
gpo1971 Posted November 21, 2013 Share Posted November 21, 2013 With selling fees, stamp duty, conveyancing fees, removals and deposits, it extortionate to move house. We looked into it about a year ago and decided against it. We wanted to downsize but would have ended up forking out just as much for a lot smaller place. Link to comment Share on other sites More sharing options...
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