Most people moving within Greater Vancouver have to sell one home and buy another, and the two rarely line up on their own. The question is which risk you’d rather manage: owning two homes for a while, or having nowhere to go. Here are the ways to approach it, and the questions to settle with your lender before you start.
Option 1: sell first
You list and sell your current home, then buy with the proceeds known.
- The advantage: you know exactly what you have to spend, and you can never end up owning two homes.
- The risk: you may need somewhere to live in between, or have to buy faster than you’d like.
- How to soften it: negotiate a longer completion or possession date on your sale, or arrange to rent back from your buyer for a short time.
Option 2: buy first
You find your next home, then sell.
- The advantage: you only move once, and only into a home you’ve chosen.
- The risk: you may carry two homes if your sale takes longer, or sell under pressure to meet your purchase.
- How to soften it: leave a gap between your purchase and sale completions that’s realistic for your market, price your home to sell, and arrange financing for the overlap before you write an offer.
Option 3: buy subject to sale
You make your offer on the new home subject to the sale of your current one. BCFSA lists this among the subjects buyers commonly use. It protects you from owning two homes, but sellers often see it as a weaker offer, and they can keep considering other buyers while your subject is outstanding. A contract can also include a clause that lets the seller, if another acceptable offer arrives, require you to remove your subjects within a short time. It works best when your own home is likely to sell quickly.
Financing the overlap
Lenders have products for the gap between buying and selling. The right one depends on your situation, so ask your lender or mortgage broker early, before you write an offer. Questions to settle:
- Bridge financing: will they lend against your firm sale to cover the down payment on your purchase, for how long, and at what cost?
- Porting: can your current mortgage move to the new home? The Financial Consumer Agency of Canada notes that a portable mortgage lets you transfer your existing mortgage when you sell to buy, and to check with your lender whether yours is eligible.
- Prepayment penalties: what would it cost to break your current mortgage? FCAC warns that if you sell before the end of your term, you could owe your lender thousands of dollars in penalties. Ask for a written calculation.
- Approval: what will the lender need to see, and when, to approve the new mortgage?
Sequencing the dates
The cleanest moves line up three dates in two contracts: the completion of your sale, the completion of your purchase, and possession of each. A common plan is to complete your sale and your purchase a few days apart, with the sale first, so the proceeds are available. The details, including what your lawyer or notary needs and when, are worth planning before you list.
Questions people ask
Which is better, selling first or buying first?
It depends on the market and your finances. In a fast market for your type of home, buying first is less risky; in a slower one, selling first usually is. We can look at the numbers for your home and the one you want.
Can I make my purchase subject to selling my home?
Yes, and it’s a common subject. It protects you, but it can make your offer less attractive to a seller.
Start with a private valuation of your current home
General information for homeowners in British Columbia, current as of publication. Financing products and their costs vary by lender; your lender or mortgage broker can advise on your situation.