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Moving house
If you want to move from your current property to a new one, you could face a double financial burden. Read about the available options to avoid this and which might be suitable for you.
Content:
There are many reasons for moving house: your family is growing, you鈥檙e about to change job and start working in a new place, or a property in a more attractive location has just become available. For real estate owners, the process is somewhat more complicated than for tenants renting a property. Find out in this article how best to proceed.
If you sell your home to buy a new property, you risk a double financial burden. This is because some of the money you need to purchase the new property is still tied up with the old one.
What is the best way to proceed in this situation? We must first point out that there is no universal answer to this question. However, there are arguments in favor of each alternative which make it easier to weigh up the pros and cons.
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There are two main advantages to buying a new property while continuing to live in and then selling your existing home: You only have to move once and you are under no time pressure to find a new home. From a financial point of view, however, you will still need to sell your current property quickly to ensure liquidity. There are various ways to complete both the purchase and the sale and to ensure a successful move.
This option is probably the most attractive from the buyer鈥檚 point of view. It means that the buyer enters into a contract with the seller according to which they agree to purchase the new property only after their current property has sold. This solution is highly dependent on the current real estate market, i.e. supply and demand. If demand outstrips supply, this option will not be very common.
Since making a conditional offer as described above is often not a viable option, the question of personal liquidity soon arises for many people. As long as the current property remains unsold, their financial resources are still (at least partially) tied up and therefore can鈥檛 be used to purchase the new property.
Interim financing, also called double financing, is needed to bridge this shortfall. Interim financing is a credit or loan made available for a limited period until the tied-up equity becomes available. Interim financing is largely tailored to individual needs and situations, which is why there is no established, reasonable standard solution on the Swiss market.
Initial situation
Clarifications on interim financing
The main sticking point: affordability
This scenario results in less financial pressure. If the existing property is sold first, the money from the sale becomes available to the mortgage holder as equity to invest in the purchase of a new property. This means less of a financial burden because there is no need to pay two mortgages at the same time or sell the existing property quickly, possibly at below market value, to make funds rapidly available.
However, there are also disadvantages: if you sell first, but the new property is not ready to move into immediately, you may have to move twice. If you have not found a new property yet, you鈥檒l need to find one quickly and you may end up making too many compromises.
This solution is probably the most advantageous 鈥 if it鈥檚 feasible for you. Leaseback is when the seller continues to live in the property after the sale 鈥 and pays the buyer rent for doing so. How long this solution can work for is ultimately up to the individuals to determine. Such a solution may also suit the buyers, who are also rarely ready to move from one day to the next. The only catch to this option is that by limiting the pool of prospective buyers to those who will agree to the leaseback, you are likely to receive fewer offers. Moreover, you still won鈥檛 have a limitless amount of time to find a new home.
If leaseback isn鈥檛 an option, the only remaining solution is temporary rental. After all, the sale of one property and the purchase of another don鈥檛 always go smoothly. This creates a gap during聽which accommodation must be found. The challenge is to find a suitable property that is available for temporary rental 鈥 i.e. for which you can agree on short notice periods.
To be able to act quickly, it鈥檚 a good idea to start looking for a suitable rental property when you鈥檙e still trying to sell you current property. Similarly, it鈥檚 best not to rent for too long, as market prices are constantly evolving.
Finally, you could also decide not to sell your own property, but instead opt to rent it out long-term. You need to make sure that you can generate a rental income that will cover all your costs as the landlord. Although rental income is taxed, you can still deduct costs for value-preserving measures such as maintenance and renovation. It鈥檚 worth seeking tax advice to check whether the calculation adds up.
A 0.30% interest rate reduction on your first home with 蜜豆视频 or for the repayment of an existing mortgage with another bank.
Whether you sell your old home first to acquire a new one or vice versa, both approaches are possible 鈥 and it ultimately depends on individual preference and the market situation. The above arguments can be used to clarify which option is best for your individual case. Our advisory team will be happy to help you to find a solution tailored to your personal situation.
Arrange an appointment for a non-binding consultation or if you have any questions, just give us a call.
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