How To Buy Another House Before Selling Yours

The trials and tribulations of property chains can put many people off buying or selling altogether, but needs must from time to time—such is life. 

It can get complicated and, indeed, expensive in many ways, so one route people often explore to avoid getting trapped in a chain is to buy before they sell. But is buying before selling a good idea? Can it turn out to be more or less expensive than entering a property chain? 

This guide will take you through the ins and outs and pros and cons of buying before selling so you can make a more informed decision about what to do next.

Table of Contents

• Is it sensible to make an offer on a new house before selling yours?

• The pros and cons of buying before selling

• Frequently asked questions

Is it sensible to make an offer on a new house before selling yours?

The reality of the situation is that it depends on your personal circumstances as to whether or not you should buy before selling. It’s entirely possible to make an offer on a house and buy it before selling the one you’re in, but it might not make financial sense.

Having two properties on your proverbial books means paying for two properties, whether it’s an additional mortgage, added council tax or stamp duty on a second home. One way to fund the purchase of a second home is to take out a bridging loan to cover the gap while you try to sell your existing property. 

What is a bridging loan? 

A bridging loan can be seen as a financial bridge between two assets—for houses, it is essentially a short-term loan that is used to buy a second property, which will be paid back once the funds from the subsequent sale become available. 

Due to their short-term nature, bridging loans can have high interest rates per month and are a potential risk to homeowners because they are taken out before it’s known what the first property will sell for, so there could be a shortfall. Many high-street banks actually stopped offering bridging loans to the public after the financial crash in 2008, so your options may be limited anyway.

That said, it can be a viable option if you have found your dream home and you don’t want to miss out on it. Here’s a quick rundown of what a bridging loan, otherwise known as a secured loan, looks like from MoneySupermarket:

If you don’t want to take a loan out, though, you can still keep that dream house in your sights by selling quickly to a cash buyer like us—with no interest, no fees and no delays, you can have the funds in your bank for your onward purchase within days. Enter your postcode below to get started.

Can I remortgage my current home to buy a new one? 

You might have the option to remortgage to release equity from your property so you can fund a new one. This means negotiating a new deal with your existing provider or finding a better deal elsewhere, so long as you don’t have hefty early repayment charges to face.

You can adjust your mortgage to suit your new financial situation or the value of the new home, but be sure to consult a professional mortgage advisor here—you might well be better off porting your mortgage to move a competitive interest rate over to your new property instead.

Read more: How Much is Your House Worth?

Will I have more tax to pay if I buy before selling? 

Since you’ll effectively have a second home on top of the one you’re living in, you will need to pay extra stamp duty at the higher rate on the new property. However, you should be able to claim a refund on this if you sell your main residence shortly afterwards, as explained by G&T Accountancy Services: 

You can use the government’s stamp duty calculator here to work out what your situation might look like if you were to buy a second property.

You might also be subject to Capital Gains Tax (CGT) on the profit from selling the old property if it’s gone up in value, which can counter the benefits of your investments on the whole.

Read more: Advice on Avoiding Capital Gains Tax (CGT) on Your Property 

The pros and cons of buying before selling

It’s always a good idea to weigh up the advantages and disadvantages of any major decision and—let’s face it—perhaps they don’t come any bigger than buying and selling houses. 

Let’s take a look at what you stand to gain and what could work against you if you decide to buy before you sell:

Generally speaking, if you are in a strong financial position, it can be a good idea to free yourself from the shackles of a property chain and buy your next home before you sell. It will afford you the opportunity to take your sale at your own pace without being tied into a chain with four or five other houses (or more).

However, not everyone has the luxury of being completely financially stable enough to do this, so it’s more often a sensible option to sell before you buy, so you can guarantee the funds are in place to make the onward purchase.

How to sell quickly before you buy

If you have found your dream home and you want to buy it quickly before someone else snaps it up, you can sell your home fast to a cash buyer like The Property Buying Company. We are a no-chain buyer that’s ready to purchase as soon as you’re ready to sell, with none of the delays you might expect on the open market. 

All you have to do to get started is enter your postcode below and we’ll be in touch with a free cash offer within 24 hours. What’s more is that we can have the funds with you within days or weeks, depending on your preferred timeline, so we can act as quickly as you need us to in order to make your next move.

Frequently asked questions