Option 1: Sell first
Good: you know exactly how much you have to spend, and your offer on the next home won't depend on a sale.
Watch out: you may need to rent for a while or move twice. You can ask your buyer for a longer possession date to give yourself time.
Option 2: Buy first
Good: you can take your time finding the right home.
Watch out: if your home takes longer to sell, you could be paying for two homes. Have a plan, and a realistic price, before you buy.
Option 3: Buy with a sale condition
You make your offer conditional on selling your current home. Some sellers will accept this, often with terms that let them keep marketing their home and ask you to firm up or step aside if another offer comes in. It works best in a slower market.
Bridge financing
If you've firmly sold your home but the sale closes after your purchase, a bridge loan can cover the down payment in between. Lenders usually want to see a firm sale first. You'll pay interest and sometimes a fee, so ask your lender for the numbers.
Line up your possession dates
Many people overlap the two dates by a few days. It costs a little to carry both homes, but it gives you time to move, clean and paint without rushing.
Know what you’ll walk away with
Your equity is your sale price minus:
- your mortgage payout, plus any penalty for breaking it early
- legal fees
- real estate fees
- a Real Property Report and City compliance, if you need them
- moving costs
Ask your lender whether you can port your mortgage to the new home. Porting can help you avoid a penalty and keep your rate.
A plan that works
- Talk to your lender about pre-approval, porting and bridge financing.
- Get a price opinion on your current home. See my selling page.
- Order your Real Property Report early.
- Decide which comes first, based on the market and how much risk you're comfortable with.
Figures and options vary by lender. Ask yours before you decide.