For homeowners looking to upgrade from their first home to their forever home, building allows you to create a home that suits your family and lifestyle perfectly. However, managing the process isn’t always straightforward.
If you want to know how to build a house while selling yours, here is some valuable information that will help you navigate the process with ease.
How to Build a House While Selling Yours—Is It Difficult?
If you want to build a new home, selling your current home before you commence construction is generally the easiest and most cost-effective approach, as you can use the money from the sale of the property to fund the build. However, there are a few reasons why homeowners don’t adopt this strategy.
For some families, the disruption of finding and moving into a short-term rental while your new home is being built may be too much. Or it could be that your dream block came up for sale and you jumped at the chance so you wouldn’t miss out.
While holding onto your current home while you build is a little more complex, it is possible.
The Financial Implications of Selling While Building
Possibly the most challenging aspect of building while selling is managing the financial aspect.
You’ll generally have a couple of options for how to fund the build:
- Manage multiple loans – If you still owe money on your current property, you may be able to take out a second loan on the new property and manage both loans until you can sell.
- Use bridging finance – Bridging finance allows you to draw money against the equity in your current home to fund the build while you wait for a sale, however it typically comes at a very high interest rate.
- Source construction finance – Construction loans allow you to make progressive payments as you reach various milestones in the construction of your new home.
Every homeowner’s financial situation is different, so it’s always important to seek personalised financial advice to determine which method will work best for you.
Things to Look Out for When Selling While Building
Here are a couple of tips that will come in handy if you’re considering selling while building:
- If you decide to sell your current home before building a new home, make sure you factor in the cost of short-term rental accommodation and storage for your belongings (if needed) into your budget.
- Ensure your current property is nicely presented and appropriately priced to encourage a quick sale—the last thing you want is for your property to linger on the market while building costs continue to mount.
- Make sure you have a realistic understanding of the cost of construction and build a good contingency for any unexpected costs into your budget to avoid finding yourself in a tight spot.
- Look for ways to keep the project on budget—selling your house yourself is a great strategy that can help you save big on agent fees.