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Buying your next home: Tips for existing homeowners

You already own your home—which means, unlike a first-time buyer, you're not just looking to buy your next home, you also need to deal with selling your current one.

Do you sell first? Or buy first? And what if there's a gap between the two? Juggling both sides of the process can feel overwhelming, but we've put together some strategies to help you make the transition go more smoothly.

Should I buy before I sell — or sell before I buy?

Buying your next home before selling your current one can sometimes be a good choice: For example, it lets you move on your own timeline, without having to worry about arranging for temporary housing. But sometimes, selling before you buy might be the better (and possibly less stressful!) route to take.

Two common things to consider when deciding whether to sell before you buy (or vice versa)? Your financial situation and the state of the housing market. Let's take a closer look at how these two factors might play a role in your decision.

Your financial situation: Can you comfortably carry two mortgages?

If your finances can handle two mortgages, buying before you sell could give you the flexibility to find your ideal home without feeling rushed. But if temporarily paying for two mortgages isn't an option, selling first may be the safer bet (but keep in mind, you may have to find temporary housing if you're not able to close on your new home in time).

What's the current condition of the housing market?

It's often cheaper and less complicated to close on both the sale of your existing home and the purchase of your next home at the same time. But that's not always easy to arrange. Here's how housing market conditions might affect you as a buyer and as a seller:

 

Market condition

Features

Potential impact

Buyer's market

Slow real estate market—properties typically take more time to sell.

· Sellers: may take longer to get an offer

· Buyers: generally have more options available and less pressure to make a quick offer

In a buyer's market, selling first may be the safer option, because conditions make it easier to buy than to sell. 

Seller's market

"Hot" real estate market—properties typically sell quickly.

· Sellers: may receive multiple offers within a short period of time

· Buyers: often need to act quickly, as there tends to be higher competition among buyers  

In a seller's market, buying first may be the better option, because conditions make it easier to sell than to buy.

Ways to help boost your home purchase budget

Whether you're upsizing, moving to a new area for work or school, or simply looking for a change, sometimes the numbers don't quite add up the way you'd hoped. Here are some strategies that may help you improve your home buying power:

  • Postpone the process. Having more funds available for your down payment may help broaden your purchase options. If you're able to wait a little longer, consider using the extra time to increase your savings—and your home purchasing power.
  • Strengthen your financial profile. Taking steps to improve your credit score and pay down existing debt improves your overall financial position, which may have a positive effect on the mortgage options available to you.
  • Explore different mortgage options. Talk with your bank or lender about the types of mortgage products they offer and how different products might affect your home purchase budget. 
  • Leverage your home equity. You may be able to access some of the equity you've built up in your home to put towards the purchase of your next home. Your bank or lender can explain what's available, how the process works, and help guide you through your options.
  • Adjust your wish list. Whether it's expanding your search area, being open to "handyperson specials" (homes in need of renovation), or reconsidering your need for certain features, changing your preferences might open up more options within your budget. 

How to navigate the real estate market

Entering the real estate market once again might feel overwhelming, because you'll be handling both the sale of your current home and the purchase of your new home. Here are some strategies to consider to help the transition process go more smoothly:

  • Prepare a budget. You may have been pre-approved for a mortgage for a specific amount—but that doesn't always mean you can "afford" that amount, from a lifestyle perspective. So it's a good idea to prepare a budget, to make sure your spending habits can accommodate your new mortgage payments. Plus, having a budget may help you resist the temptation to jump on a home that's too costly for your financial situation—especially in a competitive market.
  • Partner with a knowledgeable realtor. Ask friends, family, neighbours, and work colleagues  for realtor recommendations. Since you're both buying and selling, look for a real estate agent with a wide network and access to resources for marketing your existing home, and who also knows the local market well enough to alert you to new sales listings before they're widely advertised.
  • Determine your ideal selling price. Knowing the minimum price you want to sell your existing home for can help you negotiate with more confidence—and help keep your home-buying budget on track as well. Consider discussing your ideal selling price with your realtor, as they will likely know the current pricing trends in your area.
  • Stay open-minded and flexible. You may have to act quickly when you see a home you like—especially in a competitive market. But even in a sellers' market, be patient and try not to get frustrated—you don't want to feel pressured into an "anything goes" mindset or rush into a major purchase decision. 

How to bridge the gap between sale and purchase

Buying a new home before selling your current one can sometimes create a timing gap, and bridging this gap often requires careful coordination. Here are some strategies to consider:

  • Short-term financing. Options like a bridge loan may be helpful for managing the transition period between selling your current home and buying your next one. Ask your banker or lender for advice about possible financing solutions that might work for you.  
  • Closing date. Consider negotiating a longer closing period on the sale of your home, or a shorter closing period on the purchase of your new home, to help reduce or eliminate any timing gaps. 
  • Temporary housing. Whether it's a short-term rental or staying with family or friends, arranging for temporary housing as a backup plan can help ease the pressure of bridging the gap between sale and purchase.

Home insurance tips

Your existing home insurance won't automatically transfer to your new home. The good news? If your current insurance is with TD Insurance, your belongings will typically still be covered while in transit during your move (subject to conditions).

But you'll still need to set up coverage for your new home, so it's also a good time to do a full coverage review, to help ensure you don't experience any unexpected gaps in coverage. And don't forget, your bank or lender will likely require proof of insurance before finalizing your mortgage, so getting everything in place ahead of time can help you keep everything on track.

Here are some tips for finding coverage that fits the needs of your next home: 

  • Update or upgrade your coverage. Many factors could impact the coverage you'll need, such as location-specific risks (for example,  hurricane-prone areas), a higher cost to rebuild or repair, or special features like an indoor swimming pool or elevator. Talk to your insurance provider to ensure your coverage meets the needs of your new home.
  • Insure the full replacement value. Replacement value covers the cost to rebuild your home, including labour and materials—without taking into account any depreciation in value
  • Explore coverage and endorsement options. For example, if you're a TD Insurance customer, you may be eligible for add-ons such as the Settle Your Way endorsement and coverage options like the Million Dollar Solution®.
  • Arrange for coverage of your new home before closing. While your old policy  might cover your belongings during the move itself itself,  help ensure a smoother transition by confirming that your new policy is effective the day you take ownership of your new property.
  • Plan for any coverage overlap. If you're closing on your next home before you've sold your existing home, you'll likely need to have insurance on both properties until you're able to close on the sale of your current home.
  • Obtain and compare quotes. Shop around by obtaining online quotes and evaluate your options based on price and the coverage provided. 
  • Explore discounts. At TD Insurance, for example, we offer over 30 ways to save on your home and auto insurance. And if you're already a  TD customer, you may be eligible for discounts on your new home or condo insurance policy with TD Insurance. 

A little planning and preparation can go a long way when you're selling  your existing home and buying your next home. By staying focused on your goals and making smart choices, you'll be better prepared to turn your plans into reality.

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The content on this page is for general information purposes only and does not constitute legal advice. Coverages and discounts described herein may be subject to additional eligibility criteria, limitations and exclusions. In the event you make a claim, potential indemnification is also subject to the receivability of the claim and the type of coverage you bought.

In the case of conflict between the content on this page and your policy wordings, your policy wordings shall take precedence.