The idea of buying before you sell has been viewed as an alternative solution. The benefits of buying before selling are becoming more apparent. According to REA Group’s Property Seeker 2020 Report, one third of sellers had planned to do so before 2020. With buyers eager to cash in on the rising market, that figure has jumped significantly.
Eyeing off property number two before selling property number one? You’re not alone.
The upsides to buying first
Purchasing before selling has some key benefits. First and foremost, it gives buyers control.
Taking the traditional route and selling before buying will leave you looking for a home with the pressure of a looming settlement date.
This can be an extremely stressful time — especially if you are facing the prospect of finding a temporary rental, organising utilities and removalists.
With the clock ticking, some people end up buying a property that’s not exactly what they want.
If an auction doesn’t go to plan, it can derail your settlement plans.
Meanwhile, when purchasing first, the pressure is off and you can take your time, explains Aaron Bassin, CEO of Bridgit, a bridging loan specialist allowing customers to buy first and then sell.
“We are seeing growing demand for this strategy of property buying and the reason is simple: customers love being able to spend the time finding the perfect next home without the added pressures that come with selling first,” Bassin says.
Another key advantage is that your home may increase in value in a rising market, netting you more money the longer you hold on to it.
How to use your equity
The good news is you don’t necessarily need to have bucket load of cash saved up to buy a second property, a common scenario for Aussie downsizers.
One option is to unlock the equity in your current home by using a bridging loan to fund the purchase.
This is a lending scenario where a a loan is secured against your property asset, essentially unlocking its value without you having to sell it, explains Bassin.
If you paid off a significant portion of the home you live in, you could access that value without having to sell first.
“Bridgit can provide a loan amount of up to 75% of the combined value of the existing property and new property looking to be purchased,” Bassin says.
With the ‘buy now, sell later’ concept catching on, both downsizers and upsizers are increasingly seeing the advantage of this finance option to find the next perfect home, he adds.
Finding the right lender
If you want to access a bridging loan, banks and traditional lenders may not be your first port of call.
“The bridging loan had become outdated and was being underserved by the traditional lenders, with slow approvals and lack of accessibility,” says Bassin.
“That’s why we decided to make a product that is suited for the customer of today.
“At Bridgit, the process is simple: complete an application online and if eligible, receive same-day approval — so you know your borrowing power instantly.
“Once you purchase the property, you then have six months to sell your current home, three months of which are interest free. “
All pictures: realestate.com.au