Buying a new home without selling the old one

Buying a new home without selling the old one, is only for those better financially placed. It is risky as it could cost you a lot of bridging finance costs.

Generally speaking, the proceeds of someone's house sale goes towards the purchase of their next home. It covers the money down, the transaction costs and fees, and the cost of moving.

If you buy a house without having any money from selling the house you are living in now, you will need to provide separate capital to pay for all these costs. If you have substantial savings this may be an option for you, otherwise you will have to borrow.

A bank may be prepared to advance you the cash secured against one or both properties, but will charge a higher rate of interest. The risk to you, especially if your existing home is mortgaged - and to the bank, even though they are earning interest from you - is that your present home will remain unsold, but continue to attract borrowing costs in addition to those you will be paying on the second home. The increased outgoings may put a severe strain on your cash flow, and push you into financial difficulties, which could, in extreme cases result in you losing both properties.

Of course there may be ways you can survive such a situation, such as renting out one or both properties and moving into cheaper rented accommodation yourself so that you minimise costs, but these can be complicated and inflexible.

The ideal approach is to sell your existing home before making an offer to buy another one. Buying a new home without selling the old one is high risk, and invariably ends in tears unless you have fairly high savings and a good financial cushion to fall back on.