Upgrading or Downsizing to a new home is an exciting milestone, but it can also feel overwhelming—especially when you already have a mortgage on your current property. The biggest question most homeowners have is:
“How do I buy my next home while still owning my current one?”
The good news? You have several options to make this transition smooth and financially viable. In this guide, we’ll walk you through three key pathways, outlining the pros, cons, and the practical steps for each. By the end, you’ll have the clarity to choose the best approach for your situation.
Option 1: Using a Bridging Loan
What Is It?
A bridging loan is a short-term loan designed to “bridge” the gap between buying your new home and selling your current one. This means you can purchase your new home first, move in, and then sell your old home afterward.
How It Works
- The lender provides a temporary loan to cover both properties.
- Interest is calculated on the bridging loan until your existing home is sold. In many cases, you’re not required to make repayments during the bridging term and interest is taken from the sale proceeds.
- Once sold, the proceeds from your home sale are used to pay down the bridging loan, and your remaining mortgage continues as a normal home loan.
Pros of Bridging Loans
✅ Avoid moving twice – You can move directly into your new home without the hassle of renting in between.
✅ More time to sell – You don’t have to rush to accept the first offer on your existing home.
✅ Competitive purchasing – You can buy your dream home before someone else does.
Cons of Bridging Loans
❌ Not for everyone – Requires strong equity and a good borrowing capacity.
❌ Higher borrowing buffer – Lenders apply stricter assessments due to the short-term nature of the loan.
❌ Interest costs can add up – If it takes longer than expected to sell, interest payments may increase.
Is a Bridging Loan Right for You?
✔️ You have substantial equity in your current home.
✔️ Your borrowing power is strong.
✔️ You want to avoid moving twice and secure your new home ASAP.
Option 2: Selling First, Then Buying
What Is It?
In this strategy, you sell your current home before purchasing a new one. This means you’ll have certainty over your budget, but you may need temporary accommodation if you don’t find your next home right away.
How It Works
- Understand your borrowing capacity before listing your property for sale (we recommend obtaining pre-approval to give you peace of mind for your next purchase)
- Sell your home and settle the transaction.
- Use the proceeds to pay off your mortgage and put the surplus funds toward your next purchase.
- Rent short-term (if needed) while you search for your new home.
- Buy your new home with a clear financial position.
Pros of Selling First
✅ No financial overlap – No need to carry two mortgages at once.
✅ Clear buying budget – You know exactly how much you can spend on your next home.
✅ Easier loan approval – Your lender assesses you based on a single mortgage, making it simpler.
Cons of Selling First
❌ Possible rent costs – If you don’t find a new home in time, you may need to rent temporarily.
❌ Market risk – If prices increase quickly, you may sell in a slow market and buy in a hot market.
❌ Time pressure – It can be stressful trying to find a home after selling.
Is Selling First Right for You?
✔️ You prefer financial certainty before purchasing.
✔️ You want to maximise the sale price of your current home.
✔️ You’re okay with the potential of renting short-term if needed.
Option 3: Timing Both Transactions Simultaneously
What Is It?
Some homeowners attempt to sell their home and buy a new one at the same time, ensuring the settlement dates align perfectly. This avoids the need for a bridging loan or temporary rental.
How It Works
- Understand your borrowing capacity before listing your property for sale (we recommend obtaining pre-approval to give you peace of mind for your next purchase)
- List your current home for sale and begin searching for a new home.
- Negotiate a longer settlement period on the sale (e.g., 60-90 days) to give yourself time to buy.
- Find a new home and negotiate flexible settlement dates that match your sale date.
- Finalise both transactions, so you move directly from one home to the next.
Pros of Simultaneous Settlements
✅ Avoids two mortgages – You’re never carrying both loans at once.
✅ No need for rental accommodation – You move from one home to another without disruption.
✅ Controlled transaction – You have a clear plan in place before committing.
Cons of Simultaneous Settlements
❌ Tough to time perfectly – Finding a home and a buyer at the same time can be tricky.
❌ May require contingencies – If one deal falls through, it can create unexpected complications.
❌ Limited flexibility – You may need to compromise on price or choice to meet settlement deadlines.
Is Timing Both Right for You?
✔️ You’re comfortable handling two major transactions at once.
✔️ You have a flexible timeline and are open to negotiations.
✔️ You want to avoid bridging loans and temporary rent.
💬 Ready to Discuss Your Options? Let’s Chat!
Every homeowner’s situation is unique, and the right strategy depends on your equity, borrowing capacity, and lifestyle goals.
📅 Book a free consultation today to discuss:
✔️ Your best financing options for upgrading
✔️ How to minimise financial stress during the transition
✔️ Whether a bridging loan, selling first, or simultaneous settlement is right for you
