To sell then buy or sell rent then buy?

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rscole86

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#206069 8-Dec-2016 16:20

So to follow on from the other thread...

Any opinions on whether it is a good idea to leave the property market temporarily, and house sit/rent for 6? months and keep that cash from the sale of the house as a cash deposit towards your new property. Any suggestions for/against would be appreciated.

To help with peoples answers the property is in Porirua, and is very much in the first home buyers range.

ubergeeknz

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#1684727 8-Dec-2016 16:27

If the market goes up - you will have given up the potential capital gains over that 6 months.

If the market goes down - you will be able to buy a relatively more expensive property.

And of course lending rules could well change in the interim, that will of course affect you too.

Basically it's impossible to say whether or not it is a good idea without careful analysis of your exact situation and the state of the housing market in Porirua.

BlueShift

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#1684743 8-Dec-2016 16:46

My neighbor sold his place a couple of months back, and is renting for a year while he watches the market. His opinion is its due a correction, and he works in a real estate related job. He may be right, prices seem to have topped out at the moment, although they haven't been dropping, they haven't been going any higher. He'll need prices to drop a good 5-10% to cover the costs of selling, moving, renting, then buying and moving again. All the money he's paying on rent now is money that isn't going on his mortgage.

Add up the cost of a year's rent (paying someone else's mortgage), add on estate agent fees, lawyer's fees, moving expenses and anything that you'd end up having to do twice. Take into account interest on the capital you will have in the bank. The price of your intended house needs to drop by significantly more than that to make the process worthwhile.

Dynamic

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#1684957 8-Dec-2016 21:49

Mortgages are a bit harder to get these days, especially with loan-to-earnings ratios being looked at more closely. This could be something you be wise to consider.... i.e. keeping the current mortgage facility alive vs closing it off and having to re-apply from scratch. Possibly worth walking anonymously to another bank about.

Relative of mine on a modest income went to buy a rental as his own mortgage was largely paid off. The mortgage required was only a fraction above 50% of the value of the combined properties so he thought it would be a piece of cake for a bank to sign off. Bank nearly said no as his earnings were (by their calculations) barely enough to cover the lending under the relatively new loan-to-earnings guidelines.

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#1684974 8-Dec-2016 22:50

haha ... are you asking to use my crystal ball?

rscole86

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#1693779 22-Dec-2016 12:53

Thanks for the input guys, we have pretty much settled on looking to buy first and put in offer with conditions to sell our place. We think that will be be best route as our property is in that first home buyer range so should (fingers crossed) sell quickly.