Should I sell my home before trading up?

1

1eyeonthefuture

Registered User
Messages
85
Am looking at purchasing an 800k /900k property in Kildare.
In order to finance same I need to sell my current property and use the equity built up in same in conjunction with a mortgage.
I met with an estate agent who seems to get a good portion of the more expensive properties on his books.
He advised me that to be successful in the market that I was attempting to buy in, his strong advice would be to have my house sold and money in the bank prior to bidding on a target property.
Quite simply the delay in selling my own property should I find a suitable new house would prove detrimental to a successful bid.
My problem is that maybe 4 houses come up in the area every year that would be attractive, therefore I could potentially be renting in a house that doesn't suit for a long period while I wait for a property to come on the market that I may or may not be successful in purchasing.... And all the time I've sold a house that I love but is just too small which is the driver of the new purchase.

I've never been in a chain before and have very little experience in purchasing property.. What are peoples thoughts on the estate agents advice? Is this the norm course of events that people take?
I'm told by a couple of estate agents that my own house would fly off the shelf should it go on the market.
Thanks
 
Personally, I wouldn’t accept the advice.

Your own property sounds more ‘liquid’ than a €900k property in Kildare.

The ‘done thing’ these days is to get mortgage approval on the basis of selling your own place, be ready to pull the trigger on a sales process for your own place, see a place you like, and then kick things off.

You don’t accept a bid on your own place unless your bid on the other place has been accepted.

And then you arrange the closings for the same day.

The way I look at it, if the counterbidder is a cash buyer, they’ll probably outbid you anyway.

Who wants to have to move twice, give up one’s nice home, and potentially have to live in a grotty rental and take part in that whole rat race?
 
It's the same problem most people face.

It's risky selling your own home before buying another as prices could rise.
It's risky buying before selling, as prices could fall.

If the estate agent works in your area, then work with him. Get your house ready for sale. Talk to your solicitor so that the paperwork to sell is ready at your end. Put a high price on it and tell the estate agent or another one to market it quietly. Then when you are ready to bid on another house press the sell button on your own.

Brendan
 
My experience from 3 years ago (albeit in a much lower price bracket) was that no estate agent would entertain a bid on a property from me until my own house was sale agreed.
 
There are very few people that can buy a late 6 figure, early 7 figure house without a) releasing the equity in their own and b) unencumbering themselves from that mortgage (as the bank wont lend you with an existing mortgage in place). As gordon said above the normal thing would be a chain scenario. Brendans advice is good, get your ducks in a row and be ready to go but dont sell first, anything could happen.
 
In a hot market where you have a lot more buyers than properties, agents don't want chains. More importantly, vendors don't want chains, and it's they who set the rules. They might be in a similar situation of trying to trade up or down and don't want the uncertainty of a chain and the potential of paying two mortgages.

Not that long ago I was looking at spending not far off the OP and multiple agents refused to accept a bid from me if I was in a chain, even if I listed my existing property for sale with them. They, of course, are perfectly entitled to do so.

One alternative is to arrange a mortgage on the basis or retaining and renting your current property. Depending on income, savings, and outstanding mortgage you may be able to raise sufficient funds to purchase the new place and then sell the current one afterwards. Just be careful that you have the cash flow to fund both mortgages for a time as sales can often drag on for months.
 
Leo said:
Depending on income, savings, and outstanding mortgage you may be able to raise sufficient funds to purchase the new place and then sell the current one afterwards.
Click to expand...
Assuming one was to take this approach, would it be wise to take out a variable rate mortgage on the new property so that you would not be stung with early repayment charges for paying back a lump of the principal after the sale of the original property?
 
@Benjiman -

It depends a bit on the rates on offer as well. If a one-year fixed rate was much lower than a variable then it might be worth it depending on how long you think it would take to sell your house

Second mortgages might be subject to BTL rates as well. I'm not sure what the practice is.
 
Benjiman said:
Assuming one was to take this approach, would it be wise to take out a variable rate mortgage on the new property so that you would not be stung with early repayment charges for paying back a lump of the principal after the sale of the original property?
Click to expand...
Really depends on the rates, the lender, and how long the process will take.
With AIB specifically, there's no break fee on certain fixed rates UNLESS they reduce their rates before you break. As @NoRegretsCoyote mentions, there are 1 year fixed rates available.
You need to do your research before doing it.

NoRegretsCoyote said:
Second mortgages might be subject to BTL rates as well. I'm not sure what the practice is.
Click to expand...
No. You're taking out a PPR mortgage on the new home, because you are going to move into it.
You might tell the lender you are keeping the existing property to rent out.
 
I sold my apartment in 2021 and bought a new house within 5 months.
The estate agent of the house I was purchasing accepted my bid and I went sale agreed on my apartment the same day.
The vendor was in a chain as well.
I decided sell my apartment independently and we had a wait of about 3/4 weeks before we signed the purchase contract for the house.
We just wanted to free ourselves up as much as possible and we made it very clear to the vendor that we were happy to wait as long as possible so long as we were the people who got the house so it is a bit of a risky move.
We had a rental for 6 weeks but it was worth it in the end.
 
RedOnion said:
No. You're taking out a PPR mortgage on the new home, because you are going to move into it.
You might tell the lender you are keeping the existing property to rent out.
Click to expand...
Yeah, I had no issues getting PPR rates when proposing to keep the first property.
 
The “estate agents don’t want chains” argument doesn’t seem consistent with what I’m seeing amongst family and friends.

I’m seeing people go sale agreed on their new place whilst ready to go on their existing place, and then looking to close both on the same day.
 
Leo said:
Yeah, I had no issues getting PPR rates when proposing to keep the first property.
Click to expand...
I'm curious as to whether there is some period after which the PPR rates expire if you haven't sold the first property? Or does it not matter if your total borrowing is within the Central Bank's LTI and LTV limits?

I could be in same position myself at some stage soon and would rather not be in a chain if I can avoid it.
 
Gordon Gekko said:
The “estate agents don’t want chains” argument doesn’t seem consistent with what I’m seeing amongst family and friends.
Click to expand...
The market will dictate that really. When the agents have buyers lining up down the street, they'll pick and choose. If demand is low or an offer is higher than the agent thinks they'll get elsewhere, they'll be more flexible.

Ultimately though it is the vendor who decides.
 
NoRegretsCoyote said:
Or does it not matter if your total borrowing is within the Central Bank's LTI and LTV limits?
Click to expand...
I presume if the LTV on my existing PPR was less than 70% ( the max LTV for a BTL) it wouldn't really matter from a central bank perspective

It probably matters even less if it's not the same lender. Who's really going to check.

The challenge would be the banks own credit policy. If the potential rent was many multiples of a mortgage repayment l'd imagine they'd happily ignore the first mortgage but I wonder what the tipping point is? If rent was twice my mortgage payment, after tax that would be barely breaking even and wouldn't leave much of a buffer for a missed rent payment.
 
skrooge said:
The challenge would be the banks own credit policy. If the potential rent was many multiples of a mortgage repayment l'd imagine they'd happily ignore the first mortgage but I wonder what the tipping point is? If rent was twice my mortgage payment, after tax that would be barely breaking even and wouldn't leave much of a buffer for a missed rent payment.
Click to expand...
The bank's affordability calculations will take that into account. In my case I had to provide a form from an estate agent detailing the expected rent. A percentage of that was then allowed in the calculations and income had to be sufficient to satisfy stress testing of both mortgages.
 
Leo said:
The bank's affordability calculations will take that into account. In my case I had to provide a form from an estate agent detailing the expected rent. A percentage of that was then allowed in the calculations and income had to be sufficient to satisfy stress testing of both mortgages.
Click to expand...
Out of curiosity what was the percentage that was allowed.
 
You must log in or register to reply here.
Back
Top