As a property owner you may think you know what to expect.  After all, you’ve already been through the purchase process before, and probably think it can’t be too different the second time around.

However, even if you are a seasoned property owner, there are three things you need to consider when you are buying AND selling:

1. You need a deposit    

If you have not sold your existing property yet, you probably have most of your cash tied up in your house.   So how do you come up with the deposit you will need when placing an offer on your new home?*   

• You can use a line of credit that is attached to your home, if you have one set up.  
• You can use a line of credit that is attached to your chequing account.
• You can ask your lender for a demand loan to cover the deposit and it gets paid out with the sale of the property.
• You can borrow from family and pay them back after the sale goes through.

*If none of these options are available to you, talk to your mortgage broker to come up with a different solution.

2. Do You Buy or Sell First?

Most people do not want to sell and risk being left homeless, especially in today’s hot real estate market where you are not guaranteed to have your offer accepted on your new purchase.   So you definitely need to talk with your realtor and mortgage broker about the best strategy for you.  

Make sure you have narrowed down the area you want to buy in and the price range you can afford.  Take a look at how much inventory is available that meets your criteria.  If you feel that your property will sell relatively easily and there is enough choice of inventory for your new property, then sell first with a long closing date (at least 3 months) and as soon as your buyer has removed subjects, get out there and start looking for your new home.  

The alternative is to find that new property first, again, go with a long closing date, and then put your place on the market ASAP and ensure that if you do NOT sell, you have a backup plan – and this is where your mortgage broker will have to advise as to whether you can carry both properties.

3. Bridge financing

Bridge financing is when you have sold AND bought but your dates don’t line up.   So your sale is going to go through AFTER your purchase.   Some lenders do an excellent job of bridging funds.  Some will only bridge your down payment, some will bridge the down payment and your closing costs – inquire with your mortgage broker about what’s possible for you.