That is a big process from many perspectives, emotionally, financially, logistically, everything has to be done right.
Let's take a look one some aspects of this process and how we can save money. Any advices from the readers would also be welcome..
To save a little bit on logistic problems, we are going to sell up before buying. This make financial sense.
- More money available when borrowing. We are going to have to borrow money for the new house, however as we have just sold the old house, there will be a big wad of cash sitting in the bank that we can use as a deposit on the new house.
- Save on mortgage insurance. This would be dependent upon how much cash you have. A good rule of thumb is to avoid mortgage insurance, you will need at least 20% of purchase price of the house in cash. Banks are really nasty on this as the insurance is really for them in case you default on your mortgage repayments.
- Less pressure on synchronising settlement dates. If the two properties settlement dates are not in sync, you may have a logistical nightmare. One of our friends' settlement date was out of synch by about 1 week, so he had to put all of his furniture into storage and live in a hotel for 1 week while his new property is being settled.
- The financial aspects are better managed. With a big wad of cash in the bank, you will be able to gain a better appreciation on what you can borrow from the bank.