A big real estate move is like a well-planned road trip—you need the right map and good timing to avoid detours! One of the trickiest decisions homeowners face is whether to sell their current home before buying or lock in the dream home before letting go of the old one.
Both options come with their own set of perks and pitfalls, so let’s break it down, weigh up the pros and cons, and help you decide what might work best for you.
The Case for Selling Before You Buy
Selling first means you’ve got the cash in hand and a clear budget to play with when buying so you don’t overcommit.
Why it’s a Win
Money in the Bank: You know exactly how much you’ve got to work with—no guessing, no surprises, and less risk of buying something more than you can afford.
Stronger Buying Power: Walk into auctions and negotiations knowing you’re financially ready to pounce, your financial position will be an agent/sellers dream.
No Bridging Loan Headaches: Who really wants two mortgages?! Especially if your home doesn’t sell as quickly as you’d hoped.
No Panic Selling: You won’t be forced to settle for a lowball offer on your current home because time is ticking.
What Could be a Wobble
Where Will You Go? If your new place isn’t lined up yet, you might find yourself couch-surfing with family or friends and paying for storage, or forking out for a short-term rental.
Market Games: If prices rise after you sell (like those who sold at the beginning of the covid boom), you could end up paying more for your next home or priced out of the market.
Double Moving Madness: Selling first might mean packing up not once, but twice. Movers love it; you? Not so much.
Pro Tips for Selling First
Line Up Plan B: Have a backup living arrangement sorted before you list your home.
Keep an Eye on the Market: If prices are skyrocketing, consider speeding up your home search.
Ask for Extra Time: Negotiate a longer settlement period to give yourself some breathing room.
The Case for Buying Before You Sell
Buying first means locking in your dream home before it slips through your fingers.
Why it’s a Win
No Homeless Limbo: You won’t need to stress about temporary accommodation—just move directly from your old home to your new one. Easy-peasy.
Show Your Best Side: Moving out first means you can stage your property to perfection & avoid last-minute panic cleaning before every open home.
Dream Home Secured: You don’t risk losing the perfect house while waiting for yours to sell, or making a rush purchase decision trying to minimise bridging costs.
What Could be a Wobble
Bridging Loans Can Cost: These can be expensive and stressful if your home takes longer than expected to sell.
Budgeting Blues: Without knowing your sale price, you can be playing a guessing game with your budget—some sellers wear rose-coloured glasses about what the market is willing to pay for their much-loved home.
Market Twists: If prices dip, you might end up selling for less than expected—ouch.
Pro Tips for Buying First
Crunch the Numbers: Make sure you can handle a bridging loan or two mortgages if needed, and for how long.
Hire a Pro Agent: A skilled agent can help you sell quickly and without compromising on price.
Negotiate Smart: Selling is not just about the price—the settlement terms matter.
Bridging Loan vs Renting: The Numbers Game
When deciding between a bridging loan or renting during your transition, it’s essential to weigh the costs, convenience, and risks. Let’s break it down with real-world numbers and some insights on rental availability and contract considerations in Canberra.
Scenario 1: Bridging Loan Costs
Imagine you’re upgrading to a $900,000 home while still owing $400,000 on your current mortgage. A bridging loan lets you buy first, covering the cost of your new home while giving you time to sell your current property.
Higher Interest Rates: Some bridging loans can carry an interest rate that’s 0.5%–1% higher than standard loans—a good broker can help here.
Estimated Monthly Cost: At 6% interest on a $900,000 loan (compared to 5% on a standard loan), your interest-only payments could total approximately $4,500/month.
For a 3-month bridging period, your interest costs could add up to $13,500. If your home takes longer to sell—say 6 months—you’re looking at $27,000+ in interest alone.
Scenario 2: Renting Costs
Median rents for a 3-bedroom house in Canberra sit at around $700–$800 per week. Short-term rental options can be more expensive, while standard 12-month leases may involve break-lease fees if you move out early. Let’s break it down:
Short-Term Rentals: Furnished short-term rentals might cost upwards of $900–$1,200 per week, especially for flexible arrangements, driving up the cost for a 3-month stay to around $11,700–$15,600, including moving expenses and bond.
Standard 12-Month Lease: Opting for a traditional lease at $750/week keeps costs lower at $9,000 for 3 months, but breaking the lease early could cost several weeks’ rent in penalties—bringing the total closer to $12,000 or more.
What’s the Difference?
For a 3-month period, bridging loan costs total $13,500, while renting ranges from $9,000 to $15,600, depending on the rental type and break-lease fees.
If selling takes longer, bridging loan costs climb sharply to $27,000+ for 6 months, while renting remains steadier, ranging from $18,000 to $31,200.
Key Takeaways:
Bridging Loans are a better choice if you’re confident your home will sell quickly and you want the convenience of moving straight into your new place without temporary housing hassles.
Renting can be the more affordable option, especially if you secure a cost-effective standard lease, but availability and potential break-lease fees are key factors to consider.
Short-Term Rentals offer flexibility but often come at a higher premium, making them less cost-effective than bridging loans if your property sells quickly.
Your decision comes down to how long you anticipate selling, your tolerance for temporary accommodation, and how much risk you’re willing to take on.
Which Option Wins?
Ultimately, the decision to sell first or buy first—and whether to brave a bridging loan or take on temporary renting—depends on:
Your Budget: Can you comfortably handle bridging loan costs?
Your Timeline: How quickly can you sell your current home?
Your Risk Tolerance: Are you okay with the financial uncertainty of a bridging loan?
Lifestyle Considerations: For some sellers, the “stress cost” can outweigh the potential financial savings of selling first.
The Verdict
Whether you decide to sell first or buy first depends on your circumstances, your tolerance for risk, and a dash of good luck. Selling first gives you financial clarity and confidence, while buying first lets you focus on finding your perfect match without the pressure of deadlines, and at the same time reduces the stress of living in a home that’s on the market whilst being able to present it at its absolute best.
Whichever path you choose, the key is preparation!
A skilled property agent can craft a tailored strategy to minimise risks by coordinating the timelines, negotiating the right settlement terms, and leveraging market insights to your advantage. Whether it’s buying, selling, or juggling both simultaneously, their expertise ensures a smooth and stress-free transition to your next home.
So team up with an outstanding real estate agent, crunch your numbers with a stellar broker, and keep your eye on the prize—a smooth move!
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