Ten steps to buying a home

As our lifestyles change, it’s not uncommon to crave a change in environment. Whether a seachange, a treechange, an upsize or a downsize – there comes a time when you’re ready to go from first home to next home. In this article, we share the 10 steps that make up the process of selling your current home and buying your next one.

Before you begin

Before you embark on buying your next home, it’s worth speaking to your lender to discuss your options. Mobile Relationship Manager, Blazenka Rakas, explains that she works with her customers to establish where they are and where they want to get to, taking into account their changing needs. “The sooner our customers talk to us about their plans the easier it is,” she explains. “I like to ensure my customers are aware of the government charges and real estate agent fees for selling and buying, as these can sometimes be overlooked and can be significant, particularly if stamp duty applies.”

Once you’re certain you’re ready to sell up and move on, you can get the ball rolling on these ten steps.

1. Get your current home valued

When moving onto your next home, the first step is to get your current property valued. This will give you an understanding as to what’s possible for your next move.

It’s also helpful to explore the current market while you’re at it. Contextualising your home value against the market you’ll be buying into can help establish how far your money can go, and whether a move is worth it.

2. Understand what you can afford to buy and get pre-approval

Once you know how much your property is worth, you can begin to understand your borrowing power for your next home. Consider your income and expenses both now and in the future, particularly when establishing an appropriate loan term. How many years do you intend to continue working? How may your needs change? Be sure you can afford the repayments on your next property, particularly if you’re upsizing or moving to a more expensive area.

It’s important to get your pre-approval in place early on. This gives you a much clearer picture of what your next home could look like, and offers a small amount of clarity in an otherwise complex process.

3. List your home for sale

With your pre-approval confirmed, it’s time to get your home on the market. Speak to your real estate agent about their expectations around selling price and days on market. This can help you understand how quickly the transaction needs to move.

4. Get the ball rolling on your purchase

With your agent on the ground selling your property, it’s time to make moves on your purchase. The toughest thing about buying your next home is coordinating a sale and a purchase at the same time. Keeping both sides moving at pace is key.

5. Make interim arrangements

With an idea of how quickly the market is moving on both sides, now is the time to establish interim living arrangements. If you foresee a gap between settlement on your existing home and your new home, you may need to find alternative living arrangements during that time.

You have a few options in this scenario:

• Stay with friends or family
• Rent a separate property
• Rent your existing home back from the new buyers for a short period

Your selling agent should be able to assist you here. It’s in their interest to coordinate a smooth settlement, and may be able to negotiate more favourable settlement dates or an interim lease period to bridge the gap.

6. Get your real estate agents’ support with coordinating settlement

Buying and selling property at the same time can feel hectic, but your agent is there to help. Communicate with them clearly about needing to coordinate the sale of your existing home and the purchase of your new home. They’ll likely be able to work with the vendor’s agent on your new property to line things up. They’re experts in property, after all.

7. Close the deal(s) and confirm interim arrangements

The next step is to actually buy your new home and sell your existing one. This phase can feel the most daunting, but your agents, lenders and conveyancers will be able to support you through the process. Keep in regular contact with all involved parties, and make sure they’re in contact with one another as well.

8. Coordinate your conveyancing

Like real estate agents, conveyancers are well-versed in coordinating settlements. Lean on their expertise when you need to, and be sure to communicate with them often to make sure you feel comfortable.

9. Coordinate settlements

When your next home purchase relies on the sale of the old one, your existing loan needs to be closed on the day you settle on your next property. Completion of the sale and purchase can happen on the exact same day – it’s not as uncommon as it sounds. “Trust the process,” says Bendigo Bank Senior Lending Manager Amanda Morris. “Houses do sell quickly and it can be done.”

10. Consider bridging finance

As a last resort, bridging finance can be used if your coordinated settlement doesn’t line up as planned. This type of loan essentially bridges the gap between settlements, but it can be costly and complicated. Approach it with caution. You’re effectively maintaining both loans at the same time, and so it’s not recommended unless completely necessary.

Keep in touch with your lender and communicate with them on the progress of your sale. If things are looking tight, let them know. They’ll be able to support you through bridging finance if it’s necessary.