Moving up: bridging between the sale and the purchase

Moving to a bigger home is usually two deals: selling the current one and buying the new one. The money from the sale is meant to fund part of the purchase, but the dates do not always line up. Sometimes you need to pay for the new home before the proceeds of the old one arrive, and sometimes the other way round. Planning the period in between is the heart of it.

The timing question

There are two common situations:

• Buying before selling: the payments on the new home need funding until the proceeds of the sale arrive.
• Selling before buying: the money is there, but you need to plan where to live meanwhile and what to do with the money until you buy.

Either way, check the payment schedules in both contracts and try to align them as far as possible while you are still negotiating.

What happens to the existing mortgage

If there is a mortgage on the home you are selling, plan what happens to it: repay it from the proceeds, or check whether it can be moved to the new property. Either way, check the early repayment fees and the terms before deciding.

Financing the period in between

When the payment on the new home falls due before the proceeds of the sale, look at a bridging solution for that period. Such solutions have their own cost and terms, so it matters how long they are likely to run and what the plan is if the sale is delayed.

For illustration

Say the large payment on the new home is due in a given month, and the proceeds of the sale are expected four months later. That period needs a source of funding, and a plan in case the sale is delayed further. The dates here are for illustration only.

What to check in advance

• The dates in both contracts, and whether they can be aligned.
• What happens to the existing mortgage, and what it costs to repay or move it.
• The monthly repayment during the period with two commitments at once.
• The plan if the sale is delayed or closes at a different price than expected.

Build the budget for the new home the same way as a first-home budget: the comfortable repayment first, the price after.

A timeline that can survive a delay

• Map each payment for the new property against the expected receipts from the property being sold.
• Test a delayed sale or a lower sale price and work out how long you could carry the funding gap.
• Check mortgage portability or bridging terms before relying on them in a contract; approval and the details of both transactions matter.

Common questions

General information only, not personal advice. Every figure here is for illustration.