Buying another house, how is it usually done when you already own one?

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Forums › Finance and wealth management › Buying another house, how is it usually done when you already own one?

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mattwnz

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#3119068 22-Aug-2023 19:03

MadEngineer: We’ve recently done this

Renting out the existing home made everything so much easier as we’re not relying selling first and in turn relying on the chain of sales of anyone else.

We simply got our home valued and appraised for rental and added that as an income on our loan application.

Boom, done.

It became apparent that anyone could go down this route to get themselves into their next home but instead pull out of renting before it’s advertised and put it up for sale.

With interest rates now a lot higher, the potential rent you could get may not cover interest payments depending on the type of house and it's value. So can't see banks willing to lend as much, and I would have thought that you would have had to be actually renting it out for them to allow that. I think banks are being a lot more conservative now.

MadEngineer

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#3119193 22-Aug-2023 22:42

The rental is nearly paid off. It was super cheap when we purchased it as our first home - intentional as I wanted to pay off our first home ASAP; it’s been renovated and more than tripled in value after 13 years.

It’s located in a prime location with multiple schools, shops, close to an employer of large numbers of staff - we ain’t selling it.

You're not on Atlantis anymore, Duncan Idaho.

cddt

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#3119213 23-Aug-2023 06:42

David321:

cddt:

...

Thanks a lot for all your replies, very helpful! Seems you have a background in this or perhaps you have done it a few times?

Is it common for people in my situation to find their own lawyers after drafting an agreement with the agent selling the house we want? we could then use the same lawyer to review any agreement we have?

No background in this, I have only sold one house and bought one house (both last year) but both transactions ended up being rather comlpex for different reasons. At the beginning of last year I had no idea about all of this, I had all the same questions as you are asking, and I some things I had to learn the hard way.

You should go out now and find a lawyer now that you are happy to work with for both the sale of your current home and the purchase of your new one. There are additional admin requirements these days which will need to be completed (AML etc.), better to get that out of the way now.

One more thing: I have not found real estate agents to be particularly trustworthy, and some are straight up incompetent. There is a very, very low bar for entry to the profession. So be cautious and take what they say with a grain of salt.

David321

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#3119348 23-Aug-2023 13:15

Thanks for that, any chance you could elaborate on some of the complications you faced and the things you had to learn the hard way? I am hoping to avoid any of these obviously.

Ill take your advice about seeing a lawyer early to get the admin things sorted, any idea what a rough cost for that was when you did it?

I have thought about getting my house on the market before finding one to buy as you have suggested, I am a little bit worried about it selling quickly though and putting the pressure on us to find one to buy, I understand we could put in the terms of the settlement that we have to find a house to buy before they take possession, but I think this would put off a lot of potential buyers.

Thanks again

_David_

trig42

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#3119349 23-Aug-2023 13:23

Once you've decided you want to move on, I'd still get it on the market ASAP after that.

Unless your home is in a super desirable location, or a developer wants it, it will take longer to sell than you think (it'll take your agent a couple of weeks to properly get it on the market).

Buying is the easy bit, and if you've been looking around already, you'll know what to look for. You can make a buying decision pretty quickly and if you're cash buyers, you can really bargain.

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