When it comes to navigating the property ladder, one of the biggest questions sellers face is: Should you sell your home before buying your next one? While both approaches have their merits, selling first often puts you in a far stronger financial and negotiating position—especially in today’s unpredictable market.
Let’s unpack the pros and cons of each strategy and explore why bridging finance isn’t always the safety net it appears to be.
Option 1: Sell First, Then Buy
Pros:
- Clear Budget: Once your home is sold, you know exactly how much you have to spend on your next property. There’s no guesswork.
- Stronger Negotiating Power: As a buyer without a home to sell, you’re in a better position to act quickly and make attractive offers, especially in competitive markets.
- Avoids Financial Risk: You won’t be stuck paying two mortgages or caught short if your current property doesn’t sell for the price you hoped.
- Reduces Stress: The financial certainty of having cash in hand can make your next move far less stressful.
Cons:
- Pressure to Find Quickly: You may feel pressured to find your next home quickly, particularly if you’ve already moved out.
- Temporary Accommodation: You may need to rent or stay with family between selling and buying, which can involve extra cost and inconvenience.
- Market Movement Risk: If the market is rising quickly, you may end up paying more for your next property than anticipated.
Option 2: Buy First, Then Sell
Pros:
- No Need to Move Twice: You can move directly from your old home to your new one, avoiding the hassle of temporary living arrangements.
Cons:
- Financial Stress: You could end up holding two mortgages at once if your current home doesn’t sell quickly.
- Uncertain Sale Price: Without knowing exactly how much your current home will sell for, you may overextend yourself on the purchase.
- Weaker Negotiation Position: If you need to sell quickly after buying, you may accept a lower offer just to offload your property.
Why Bridging Finance Isn’t the Magic Fix:
Bridging loans are designed to help buyers cover the gap between buying a new home and selling their existing one. While this sounds ideal in theory, they come with significant drawbacks.
- High Interest Rates and Fees: Bridging loans are short-term and often come with higher interest rates and upfront costs than standard home loans. If your sale takes longer than expected, these costs can spiral.
- Time Pressure: Bridging finance is typically limited to 6–12 months. If your existing home doesn’t sell within that time, you may be forced to refinance under less favourable terms—or worse, sell in a rush at a discounted price.
- Market Dependency: Bridging finance relies on optimistic assumptions—mainly, that your current home will sell quickly and for your asking price. In a soft or uncertain market, that’s a risky bet.
- Loan Serviceability: Lenders assess your ability to repay the combined debt of both homes, which can be a stretch for many households. This can reduce your borrowing power or cause your application to be declined altogether.
So, What’s the Best Move?
While every situation is different, selling first is usually the safer and more financially sound option. It gives you clarity, reduces risk, and puts you in a stronger position when buying your next home.
If you’re worried about timing the transition perfectly, work with a buyer’s agent or local real estate professional who can help you align the sale of your current home with the purchase of your next one. With the right guidance, you can sell confidently and buy smart—without the added stress of bridging finance.
Need Help With the Transition?
If you’re thinking about selling and want a strategy to upgrade or downsize smoothly on the NSW Central Coast, reach out to our team. We’ll help you understand the market, plan your next move, and ensure you’re never caught between two homes.
Want to learn more about what a buyer’s agent is and how we can help? Read more here.