Planning to upgrade from your current Built-To-Order (BTO) flat? Before getting to all the nifty and exciting parts of your home-upgrade process, the first and most important question you should ask yourself is this: Should you sell your current home first or buy your next one first?
In my professional advice, the best option is to buy your next home first. However, as reality paints a different picture, I understand that this approach may not be accessible to everyone.
In this article, we will explore the benefits of purchasing before selling and unravel the intricacies of transitioning to a new home with the need of selling your current property.
The homebuying process involves several stages that can be time-consuming. Here’s a breakdown of what you can expect:
Viewing and Securing Your Next Home: The search and decision-making process alone can take a month. That is, if you’re efficient.
Legal Process: The buying timeline typically spans around three months.
Seller’s Circumstances: There could be a possibility that your sellers ask for extension of stay or request you to rent the property. Depending on their personal circumstances this could add another 3 to 4 months.
Home Renovations: After you’ve received the keys from the seller, there will be another two to three months allocated for renovation.
Buy First, Sell later: The Ideal Approach
In between the home-buying stages it’s crucial to have a place to call home. Waiting for your next house to be ready can take up to nine months, with the possibility of panning out longer if you fail to manage your timeline properly.
Plot twist incoming: I did not follow my own advice, or more accurately, unable to follow it, like many other clients that share the same situation.
Procuring a house requires a significant amount of money that isn’t commonly readily available. To paint you a picture, the house I bought costs $1.4 million, which I have to shell out to the seller first before getting the key.
One option is to take a loan, but this could only take up 75% of the total home cost, and the completion still requires 25% of the unit price for down payment. For me, that equals $350,000, with the addition of duty tax of around $40,000, in total, the upfront payment required is $400,000. An amount I do not have hanging on my bank or tucked underneath a pillow.
How I Got the Money
If your case is like mine, where your money could only be generated by leveraging your existing house, there are two available options: sell your house, or gear up- meaning, to get a term loan from the profits of the house.
Issue is, banks usually don’t allow you to use term loans for financing another property purchase, as that circumvents the rules for a house downpayment, and they want you to save for it rather than to take a loan.
To further check on these details, you can visit your bank and try to inquire about getting a loan. Once a personnel asks you and finds out your loan’s purpose is to purchase another home, it’s likely that your request will be rejected.
Sell First Buy Later: Realistic Approach
If you’re one of the people grappling with the challenge of upgrading to a new flat by selling your current property, don’t worry. You’re not alone. In fact, through my years of experience as a realtor, selling first before buying is the frequent course majority of my clients, especially the younger ones, go through. In my observation, only clients within their 30s-40s are able to manage buying first then selling later.
The ideal is one thing, but reality is another. Selling your current flat first, to be able to afford financing a new one is the most attainable option for many people, including myself. AS saving up is a long and challenging process when wrestling with the burden of managing various expenses, including housing, childcare, and personal expenditures
Getting Expert Services
To help you solve the conundrum of upgrading to a new house without having to move out of your property, engaging with experienced experts can provide you with the right guidance, ensuring you can navigate this complex process smoothly given your unique needs.
Here at Herohomes, our team assists you with personalized advice on your property upgrading plans. Simply contact us through this website or drop us a message . No matter your situation, we’re here to help you make informed decisions on every step of your homeownership journey.