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Mortgages

Buying and selling a home at the same time

June 28, 2024
3
min read

Finding your next home, selling your current property, and financing both transactions - it’s a lot of work. Let’s explore how to navigate this transaction!

Three mini houses on stacks of coins

Your dream home today may no longer suit your needs 5 or 10 years from now. You might decide to start a family. You might get a job in a different area of the city. Or, you might want to downsize!

No matter the reason, the perfect home for you today could look very different in the future.

But to purchase your next home, you will likely need to use the equity from your current home.

Buying and selling a home simultaneously is one of the more complex transactions in real estate. It’s easy to get overwhelmed by everything involved in the process!

You may have questions like:

  • Should you sell your home before you look at buying a new one?
  • How will you finance your next purchase if the sale of your home falls through?
  • What if your moving and possession dates don’t line up?

We met with Ryan Gregory, Digital Banking Advisor at Cambrian, to talk about how to navigate this transaction:

Step 1: Making an offer

If you’re planning to make an offer on your next home, you need to consider that the financing for it probably sits within the value of your current house.

You can add a condition to your offer that it’s contingent on the sale of your existing property.

Doing so may make your offer less competitive – the seller might be looking for a buyer who will take possession quickly. But it’s important to protect yourself in case your current home doesn’t sell in time.

“Adding a condition is a way to protect yourself,” says Ryan. “You’ll be able to back out of the sale if your home doesn’t sell.”

Step 2: Covering your finances in the meantime

While you wait for your current house to sell, how will you afford your next one? You don’t want to get stuck paying 2 mortgages at once. What can you do?

“Most homeowners need to use the proceeds from their current home as a downpayment on their new home,” says Ryan. “But if your possession date is before the move out date of your current home, you’ll need something to cover those funds.”

That’s where bridge financing comes in. It’s a short-term loan that helps you cover expenses until your house sells.

How does bridge financing work?

If you are an existing homeowner, and you’re buying or building a new home before your current one sells, you may need bridge financing (also known as Interim Financing).

“Bridge financing helps you cover payments when the possession dates and moving dates of the transaction don’t quite line up,” says Ryan.

Bridge Financing is a short-term loan ranging from 60 to 180 days that will “bridge” the gap between buying and taking possession of your new home, and the date you receive the sale proceeds from your existing home.  

To qualify, you must have an unconditional offer on the sale of your current home.

That means the offer is not contingent on another event, such as the sale of the buyer’s home, financing, or a home inspection.

“The most important factor in getting approved for this financing is ensuring you have an Offer To Purchase (OTP) on your current home. It’s okay if the possession dates don’t align, but you need an OTP,” says Ryan.

Step 3: Finance your next mortgage with Cambrian

“Buying and selling a home is a complex transaction, but there are a lot of ways we can help members through the process,” says Ryan.

“We’re able to meet with members whenever it’s convenient for them. With our Digital Branch, we offer phone and video appointments on evenings and weekends.”

And who knows - your current home could turn into your dream home with a bit of TLC! If you need help funding your home renovations, we can help with that, too.

Let’s unstress your home buying. Book a meeting with a Cambrian Advisor today!

Today’s Rates

*All rates and yields subject to change without notice.
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“I had a wonderful experience at Cambrian. I've been with the same institution for the last 21 years and all the fees and restrictions have finally pushed me into wanting to make some changes.

My advisor was prepared for my arrival with all the documents ready and waiting. He took the time to go over each one...”

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