Real estate loan: is it better to sell before buying?

Ideal scenario: you identify the property that suits you. During the negotiation period, you put your accommodation up for sale and you immediately find a buyer. In this case, the two files being carried out simultaneously, reconciling the dates of purchase, sale, transactions, and moving is possible. Does this alignment of the planets concern many people? Difficult to say given the absence of precise statistics on the subject.

On the financing side, this scenario is obviously ideal. The proceeds from the sale will allow you to settle the current loan for this accommodation. If you still have money after the total repayment of the credit, it can also be used as a contribution for the new main residence, in order to limit the amount of credit contracted for the new well. Namely, concerning the early repayment indemnities (IRA) of the old loan: many contracts provide an exemption for the resale of the property.

Sell before buying

sell before buying

Selling to buy in the process is obviously possible. But the interested parties then put themselves in an uncomfortable situation according to Laurent Vimont, president of the Good Finance network: If you sell and you do not find a satisfactory property before the actual sale, what are fallback solutions Between signing the compromise and making the sale to the notary, it usually takes 2 to 3 months.

If you sell and you do not find a satisfactory property before the actual sale, what are the fallback solutions?

By targeting the sale in priority, the most secure solution is to negotiate the departure date with the buyer. Still, the buyer must accept, tempers Laurent Vimont. The other option, which allows you to take the time to buy the right property: sell, then rent before buying. I believe that it is not so frequent, judge Laurent Vimont, without however having statistics on the subject. The rental option obliges sellers to make two moves, with the inconvenience that this implies: time and costs incurred.

Real estate agent advice

Real estate agent advice

On the financing side, as in the previous case, this scenario does not pose great difficulties since all the elements are known. The owner knows how much the sale will bring him: he, therefore, knows his budget for the purchase and can probe one or more banks to work out the financing of the purchase if he is targeting more expensive housing. On the other hand, in the case of rental during the transition period, the rents will be lost in the sense that they will not be invested in real estate.

Laurent Vimont, President of Good Finance: The market is dynamic, with 3-month sales periods, on average [ 91 days in France, Editor’s note ], and interest rates At very low prices, it is not taking a big risk to buy before selling. This is the option we recommend, just to have time to choose your new main residence.

Use a bridging loan to buy, then sell

Use a bridging loan to buy, then sell

A bridging loan is an advance on a future sales. Several types of financial arrangements exist but the principle remains the same: the value of the current home is estimated, then the bank loans in the short term (1 to 2 years most often) the equivalent of 50 % To 70% of the value of the property.

An amount then considered as a contribution to the financing of the new purchase. In short, without having sold his main residence, the buyer takes out two loans: a bridging loan to have the future contribution of the sale, and a classic long-term real estate loan.

Concretely, before reselling your property, you only repay the monthly payments of the classic loan, the additional real estate credit, in the long term. Deadlines to which are added the borrower insurance contributions for the two credits. The interest and the capital of the bridging loan will only be reimbursed at the time of resale. Depending on the amount, the possible excess of the resale can then either be saved or allow the long loan to be reduced, via an early repayment.

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