A property chain occurs when buyers and sellers are linked together due to each buying and selling houses from one another.
Your part in the chain involves your current house and who you sell it to, and your new house and who you buy it from. Due to the various processes, people and deals involved, being in a chain can be a frustrating time, with deals falling through, a buyer or seller changing their mind and legal firms taking ages to process paperwork for example. These issues can break the chain, so we will talk you through what you can do about this.
A bridge loan
You may wonder if it’s worth buying your new house before you’ve sold the current one. Imagine finding your dream home, deciding to buy it after you’ve sold your current property, but missing out because another buyer comes along who can pay straight away. You’d regret losing it. Buying your new house first also provides you with somewhere to live straight after selling, making the move less stressful. Getting a bridge loan can help with the down payment for your new house. A bridge loan bridges the gap between the time your first home is sold and the new house is bought and is taken from the value of your current property.
However, owning two houses at once can be costly. Repaying two mortgages, house taxes and other costs such as maintenance can certainly add up. Your current house could also be on the market for months, adding estate agent fees and leading you to lower its value as you desperately try to sell it.
Then there’s the interest on the bridge loan. This can cost up to 24% of the original loan a year. Especially if your current house is on the market for a while, you may find it difficult or be unable to pay back the loan. Your new house may then become unaffordable and you may need to enter the chain all over again as you try to find a more affordable house. You obviously don’t want this to happen.
Sell your house first
Alternatively, you could sell your house first. This may provide you with the funds to purchase your new house as well as ridding you of many of the costs and fees mentioned above. Again, though, your house could be on the market for months meaning you miss out on purchasing your desired, new house. It may be beneficial to sell your house fast, providing you with funds for the new house and getting you out of the chain as quickly as possible, saving you time, money and stress. This can be done by lowering your asking price (though still incurring estate agent fees) or letting We Buy Any House buy your house off you quickly.
Whatever you decide you do, you’ll be in a property chain until your current house is sold and you’ve bought your new house. Advice for making the chain work for you includes:
- Ensuring your estate agent makes use of a sales progressor to continuously move processes, deals and the people involved forward.
- Offering to communicate with potential buyers adding a personal touch to the selling of your property. If you are unable to do this, ask to be given updates as often as possible.
- Ensuring you are organised. Ask your estate agent on what you can do to help. Have your finances accounted for where possible and have a plan in place to afford the new house’s deposit. Deliver important documents by hand or special delivery and sign all your paperwork quickly, showing the seller that you want their house as soon as possible.
When you find the perfect house, you just want to buy it as soon as possible. Entering the property chain can be an arduous process so ensuring it works for you is essential. As with anything regarding property, make sure you have all the necessary information available, lowering the potential for mishaps and bumps along the road.Back to all articles