Make an offer prior to selling existing house?

Obviously (I think!) the standard approach when moving house is to sell your own house first then use the funds received to put towards the purchase price of the new house??

Can anybody tell me the downside, if any exists of purchasing the new house (mortgage approval permitting) and keep the first house on the market and hopefully sell as quickly as possible, then pay the funds received off the mortgage on the new house?

The immediate downside is of course that the original property may not sell for some time, during which time interest is being paid on a much larger mortgage but is there any CGT implications or anything else that springs to mind?

Thanks

I think before even thinking of putting an offer in, you might sound out your lender as to whether they would consider lending you €X on the basis that your own house will go on the market at the same time as you are drawing down the mortgage.

It may be that you have enormous cash reserves and that you will only need a small mortgage to purchase the new house - congrats! if that is the case - or, if that is not the case, it may be that your bank would question your ability to service a large mortgage until your own house sells. And if they won't lend, I suspect that ends your prospects.

mf

mf1 said:

I think before even thinking of putting an offer in, you might sound out your lender as to whether they would consider lending you €X on the basis that your own house will go on the market at the same time as you are drawing down the mortgage.

Click to expand...

The option is potentially available (approval in principle received). I'm not particularly sure that this is the best way to go though.
The main advantage for me would be that I can secure the purchase of the new house sooner before another potential buyer beats me to it.
I just wanted to see what the disadvantages were...

This has happened a lot of people over the past 18 months. They bought a new home assuming that they would have no difficulty selling their old house.

I know of two cases where the vendors have been unable to sell their old houses and have reduced the price by 30%. Their finances have been completely wiped out by this. The interest on two mortgages for 12 or 18 months is small compared to a 30% fall in the selling price.

There are under real pressure and may have to reduce their price further. They don't want to let the houses as they want to sell them.

Unless you are very wealthy and you are not relying on the sales proceeds, then sell first before buying.

Brendan

If you can comfortable pay the mortgage on both properties and your jobs are guaranteed then there is no problem. Easiest thing to do is this uncertain market is to sell your own house and rent until you buy another thereby not putting anything at risk.

I agree with Bronte, at the end of the day the new property you buy could be worth less then you paid for it (which is a distict possibility at the moment). You could have wasted "a lot" of money for very little gain.