How do you sell your main residence to buy another one?

You are considering sell your main residence to buy a new one ? This type of real estate project is quite common and quite feasible provided you know the advantages and disadvantages of the various possible strategies. Whether you choose to sell before, after, or to do both at the same time, each option has its advantages... but also its challenges! Between bridging loans and cascading sales, there are several approaches to achieve the sale and purchase of a house or apartment. In this article, discover how to succeed in this project without stress, by making informed decisions to optimize your finances and maintain your peace of mind.

Why sell your main residence before buying another one?

Advantages and disadvantages of selling your home before buying another

Start by selling your home allows you to know exactly how much you can invest in a new property. Thus, you know your personal contribution and your borrowing capacity before engaging in a new one. real estate buying process. This allows you to properly prepare your financing plan and to know the type of property you can buy.

By selling your home first before buying another, you simplify the financing of your future acquisition. If your current home is still associated with a mortgage, selling it allows you to pay off your loan and start a new real estate project with a healthier financial situation. This makes it easy to get a new home loan with favorable conditions.

Selling before buying real estate also lightens your mental load because you don't need to be on two fronts at the same time, i.e. selling and Buying a main residence. Once the sale is complete, you have the free spirit to focus fully on finding your new home. If you come across a rare find, you are ready to send an offer to buy immediately, without waiting for your old home to be sold. In addition, it prevents you from simultaneously bearing the expenses of two properties.

However, the main disadvantage of this strategy is that between the selling your home and buying the next, you need to find temporary housing. In most cases, this involves renting a home during this transition period, which can range from a few weeks to several months.

Since you are not really living at home during this transition period, you may be reluctant to unpack all your boxes, which can lead to an uncomfortable situation from a logistical point of view, especially if some of your belongings are in a storage room.

At the financial level, sell your home before buying another may result in additional costs, such as:

• the amount of the rents for temporary accommodation,
• the price of an additional move,
• the rental of a furniture storage unit.

To alleviate the transition period, an economic solution is to live temporarily with a loved one or a family member. If this is not possible, you can ask the purchaser of your house to stay in your old home for a few months after the sale, until you find your new main residence. Of course, this agreement must be formalized in a contract, including financial compensation and a reasonable period of time to vacate the premises.

“I have just purchased my second property and Kyka took care of everything from A to Z.
From research to work, the architect managed to transcribe my need as I imagined but better!
The team is responsive and it allowed me to free up time for myself and to leave the work part with complete peace of mind!
Thanks again, I highly recommend!”
Adrien Balikdjian

Tips for selling your home before buying another one?

Give yourself the means to sell your main residence at a good price

It is almost impossible to know in advance when your property will find a buyer and at what price. Some homes sell out in a few days, others may remain on the market for several months.

Wanting to sell your main residence quickly means taking the risk of lowering the selling price of your property and reducing your buying capacity to buy a new property. This is why we advise you to take the time to sell your property without rushing. By doing so, you maximize your chances of selling your house or apartment at an attractive price.

It may also be wise to do some work to make your property more attractive in the eyes of buyers. In the weeks before the sale, take the time to do a bit of “home staging” to highlight the rooms in your home (or the garden, if applicable).

For example, repainting walls or windows, repairing a broken light switch, adding a mirror or a few fresh flowers are small improvements that can appeal to your potential buyers and Give value to housing.

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Anticipate the ancillary costs associated with the purchase of a new property

Like any real estate project, it is essential to include in your financing plan the ancillary costs associated with your new acquisition, starting with notary fees. In the old one, these fees represent between 7 and 8% of the purchase price, while they are between 2 and 3% for a new property.

As mentioned above, other expenses may be added, including:

• Moving expenses and those related to renting a storage room, if necessary.
• Indemnities for the early repayment of your mortgage.

If you sign a research mandate in order to benefit from the services of a real estate hunter, remember to also include his fees (representing 2 to 4% of the sale price).

At Kyka, we support owners in buying, selling and renovating their real estate. Our project managers are at your disposal to help you sell your main residence and quickly find the property of your dreams.

Buy before selling thanks to a bridge loan

Advantages and disadvantages of buying a new property before selling your main residence

If you want buy a new home before selling your main residence, a bridge loan can be a wise solution. This short-term loan allows you to finance the purchase of your new home without waiting for the sale of your current home to be finalized. In other words, the bridge loan fills the cash gap between the two real estate transactions.

Thus, the bridge loan allows you to have the purchasing capacity for acquire a new property and give yourself time to sell your old main residence. It is a transitional credit that offers you the freedom to buy with peace of mind, even before you have found a buyer for your current home.

The bridge loan is an option open to all real estate owners, whether they have purchased their main residence or are rental investors. Les first-time buyers cannot therefore subscribe to this type of loan.

Generally, the amount of the bridge loan represents between 50 and 80% of the value of the property put on sale and its term does not exceed 24 months. That said, the loan can be renewed once.

One of the great advantages of this type of loan is how it works: as long as your main residence is not sold, you only repay the interest. As for the capital, it is settled once the authentic act of sale is signed and no compensation for early repayment is required. This is a significant advantage for those who want to buy a new property without risking being financially stuck.

Buy before you sell also has the logistical advantage of avoiding a double move. You can thus move directly into your new home, without going through a temporary rental phase.

Finally, it is an ideal option if you want buy a property with renovation work to be carried out (in order to optimize your comfort and the real estate value of your next residence). In this case, you can stay in your current home for the duration of the work and avoid staying in temporary housing for too long.

However, while bridging loans have obvious advantages, they also have risks and disadvantages that are crucial to take into account:

• This is a short-term loan, ranging from 12 to 24 months.
• If your home is difficult to sell, you could find yourself in a difficult situation.
• Interest payments start immediately, even if the principal is not paid until after the sale.
• The interest rates for a bridge loan are generally higher than those for a traditional mortgage.

“I was supported by Kyka in the realization of my project and I am very satisfied with the result! All the teams listened to me and fully understood my expectations. I am delighted to have been supported by the Kyka service and I advise anyone who wants to carry out a tailor-made and innovative real estate project to go for it!”
Olivier Dhalluin

Tips for buying real estate before selling your own

Evaluate the value of your property for sale

You will have to establish your financing plan without knowing exactly the selling price of your current property. That said, you need estimate the value of your property as accurately as possible because its price will be decisive in calculating your purchasing capacity.

But be careful, the real estate market is constantly fluctuating. For your real estate project to be a success, it is essential not to overestimate the value of your property.

Several criteria should be considered:

• The location of your home
• Its type (apartment, detached house, etc.) and its age
• Its energy performance (DPE)
• Its living area, the number of rooms, bedrooms etc...
• The environment (proximity to shops, transport, etc.).

To obtain an accurate estimate and avoid unpleasant surprises, it is strongly recommended to call on a real estate professional, like Kyka! Make an appointment with one of our project managers to discuss your real estate project in detail.

Anticipate all the administrative procedures related to the sale of your home

As soon as you are owner of your new home, and as soon as it is ready to welcome you, it is in your best interest to sell your old residence as soon as possible. Until this is done, you bear the expenses of two homes and you continue to pay the interest on the bridge loan.

To maximize your chances of sell your property quickly, it is advisable to anticipate all the administrative procedures because the sooner you have collected all the documents necessary for the sale, the sooner it can be concluded. For example, consider preparing your latest property tax notice so you can send it to buyers who want to review it.

In addition, potential buyers will ask you numerous questions when visiting the apartment or the house you are selling. It is therefore important to prepare all mandatory real estate diagnoses in advance, in particular the DPE (Energy Performance Diagnosis).

How do I buy without a bridge loan?

If the bridge loan does not suit you or if you prefer to avoid taking out an additional loan, other alternatives exist for finance the purchase of your new home. For example, you can rent out your current home in order to generate income that partially, or even fully, covers the expenses associated with the purchase of your new property.

You can also opt for rent-to-own. This mechanism allows you to rent a property with an option to buy, thus offering a smooth transition between your old and new property. During this period, you will receive employment benefits for a maximum of 3 years. At the end of the contract, the tenant can become the owner of the property by paying the sale price to the seller, after deduction of the amount of the occupancy benefits already paid.

Finally, another option is to coordinate the sale of your property with the purchase of your new home. This is an ideal solution but requires good preparation and negotiation skills.

How do I buy and sell simultaneously?

Selling your main residence while buying a new property is an entirely feasible operation, although it requires flawless organization. This approach even has a name: “cascading sales”.

The principle is to perfectly align the sale and the purchase, to the nearest day, which often requires flexibility and patience. Indeed, it is rare that the calendars of the buyer and the seller coincide perfectly. Several solutions exist to help you make the sale and purchase of your main residence coincide:

1. Buying between the promise of sale and the authentic act
2. Add a suspensive clause to the preliminary contract
3. Negotiate a payment term with the buyer of your property
4. Subscribe to a purchase-resale loan

Use the period between the sales agreement and the final act

One of the most common strategies is to take advantage of the time between the signing of the promise to sell or the sales agreement and that of the final act. Once the preliminary contract for the home you want to buy is signed, you have 2 to 3 months to finalize the sale of your current home.

In the same way, if you choose to sell your current home before committing to the purchase of the new property, it is imperative to ensure that all suspensive conditions have been met.

For example, the buyer of your house must have obtained financing and any urban planning certificates must not reveal any easements. An oversight at this level could jeopardize your project.

If all these conditions are met, it is even possible to organize the signing of the two acts (sale and purchase) on the same day, subject to good timing and good coordination of the stakeholders.

Add a suspensive clause in the preliminary contract

Another solution is to integrate a suspensive clause in the promise to sell or the sales agreement for your new property. This clause states that your purchase can only be completed if you manage to sell your main residence.

However, this option requires the agreement of the seller, who is not required to accept this condition. It is therefore necessary to negotiate well to find common ground that suits everyone.

Negotiate a deferral of payment

In some cases, you can negotiate a deferral of payment with the seller of your future home. This agreement allows you to delay the settlement of the property until you have finalized the sale of your current home.

This gives you the time you need to free up the funds needed for your new purchase, while avoiding unnecessary financial pressure.

Subscribe to a purchase-resale loan

You have probably already heard about the bridge loan, but did you know that there is a more flexible alternative: the purchase-resale loan?

This credit, introduced in 2014, combines a bridge loan with the repurchase of your current mortgage on your current home. This allows you to keep your mortgage after the sale, to have only one monthly payment to repay, to have a period of two years to sell your property and an interest rate that is often lower than that of a traditional bridge loan.

This solution can be particularly useful if you want buying and selling your primary residence simultaneously while maintaining some leeway to find the right buyer or to carry out the renovation of your new home.

To succeed Buying your new home without stress, call on Kyka! One of our project managers helps you find the rare pearl to renovate and our interior design studio is there to make it a living space that suits you and that you can be proud of.