Are you thinking of purchasing a new home before selling the one you’re in now? If so, you’re not alone. Many Toronto homeowners are tempted to buy first, and there can be some advantages to this approach. That said, there’s also reason to exercise caution.
Depending on your circumstances, purchasing a new living space when you don’t have a buyer lined up for your current home could lead to some serious headaches. That’s why weighing the pros and cons is so important. If you’re thinking of going the “buy first” route, here’s what you should know…
The upsides of buying first
Many home buyers start looking at houses with the idea that they’re just browsing. Often, they have no intention of buying until all of their ducks are in a row. Of course, things don’t always turn out that way. The good news is, there are some major potential advantages if you decide to buy first.
More time to search
Diving into the home hunt before you sell your current house can give you more time to search. There’s less pressure to find a new living space when you already have one—which can provide you with the sense of freedom you need to keep looking until you find your dream home.
Many sellers who hold off on making a purchase have to find accommodations for themselves—and storage space for their belongings—while their home is on the market. In contrast, having a place to move into can make selling your home a lot less stressful.
You could find the perfect property
Sometimes home hunters come across the house of their dreams before they’ve gotten around to selling. When the price is right, you could be looking at a rare opportunity—one that you may not have found if you’d held off on starting your search.
The downsides of buying first
Of course, there are some potential downsides to buying a home before you sell the one you live in. In many cases, there’s more risk involved. For this reason, it’s important to think carefully about the cons associated with taking this approach.
Budgeting can be more difficult
Buying first often means that your finances are in flux. Unfortunately, when you don’t know how much money you have, it’s hard to know how much you can comfortably spend. Depending on your financial situation, this may not be an issue. That said, buying first can put a lot of stress on those for whom affordability is an issue.
It’s financially riskier
If you don’t sell your current home quickly after you buy a new one, you could wind up paying two mortgages at the same time. While some buyers can afford to do this, it could place a major financial burden on others.
When (and how) to do it
At the end of the day, there’s no hard and fast rule about whether to buy a home before you sell the one you’re in now. The answer will depend on your financial situation and (in some cases) the state of the market.
If you do decide to buy first, there are steps you can take to remove some of the risk from your transaction. Ask your agent about whether you’re in a buyer’s or seller’s market, which can impact how risky buying first might be. They can also talk to you about adding a home sale contingency to your contract, which can offer some protection. Lastly, you might want to look into bridge financing, which may help lessen the financial pressures associated with the transition.
Looking to sell your home and buy a new one? We’ve helped many homeowners successfully navigate this major life transition. Get in touch—we’d love to talk to you about your needs!