How to buy your forever home when you haven’t sold your current home yet
In the current market, particularly in Sydney and surrounding regions, there is a limited supply of good houses. So it can feel like quite a risk to sell your current home before looking for another. How do you buy your forever home when your current home isn’t even on the market? And how do you obtain a deposit?
The answer is a deposit bond. A deposit bond acts as a cash promise in place of an actual cash transaction at the time of signing the contract to buy a property, or at the end of the cooling off period if you have one. If there is sufficient equity in your current home – the current value minus the loan owing on that property, then a deposit bond company will provide you with a bond for the 10% deposit. This will secure your new home without needing any cash up front. There is a fee to obtain a deposit bond and they are often available to use within 24 hours of completing your application form. I can apply for a deposit bond on your behalf if you need one.
If you’ve found a home you love, but need to make an offer quickly, ask for a 3 month settlement. This will give you time to put your home on the market and have it sold. Once you have a signed sale contract on your current home, and the cooling off period has ended, you can negotiate with the owner of the home you are purchasing and the buyer of your current home to come up with a mutually agreeable settlement date. Both the sale and the purchase will need to be on the same day, unless you have somewhere temporary to move to once you sell your current home and are waiting for the settlement date of your new home.
The traditional option for this type of transaction is a bridging loan. They can be complicated and are expensive, but do give you more time to sell. In this market, if your home is fairly priced, it is unlikely that you would need a bridging loan, and your home would sell in plenty of time to meet the settlement date of the new home.
If you are interested in finding out more about deposit bonds, or the process of buying and selling at the same time, please give me a call or message me.