You are done buying your first home and have lived in that dream for considerable time. Time flies, and you plan to grow your family. When the number of inhabitants is going to increase, the need for bigger house arises naturally and so does the need for home planning. Some people consider creating more space off the given property, while others wok out plans to move to a newer property having bigger space and more facilities for children. Let’s consider and compare three situations during home planning, i.e. remodeling instead of moving to new house, buying a home first without selling the old one, or selling a home first instead of remodeling and buy a new house later.
Home planning situation 1 – Buying a home first without selling the old one
If your old one is a free-hold property i.e. no mortgage is to be managed, looking for new house may not require selling it on an urgent basis. You will have ample time to consider the proposition of property selling. If you are a great manager of assets, blessed further with a handsome pay and have sufficient finances intact, or a huge inheritance or a back-up property or home, you may not require selling your home first, at all. In fact, you will consider converting it into a source of rental income while moving to the new home and enjoy the latter’s new and fresh vibe.
But, that was one part of the scenario, what if, when you have limited resources, existing mortgage to be managed and growing needs of family to cater to? In this case, buying a home first without selling the existing one will mean having two mortgages to manage. This is too risky and quite expensive as well.
Thus, when you are totally on your own and have no ancestral assets to cover your expenses or any other property investment to fall back on, buying a home first without selling the old one may not be a feasible option, certainly. An expert’s opinion would be, selling your home first, extract equity off it to lower the down payment for the next purchase and enjoy a smaller size EMI to make proportionate funds available for the growing needs of the family. This is the best proposition to consider, when managing of two mortgages at a time is not possible.
Home planning situation 2 – Selling your home first before buying a new house
By selling your home first, you extract equity off the existing property. You might have considered remodeling as an option instead of losing ownership of a property. Here are certain pros and cons of remodeling the house, home owners must evaluate instead of putting their homes for sale:
- If the existing property is your ‘forever home’ and you have great rapport with the neighbors and the locality is your favorite one, the ideal choice, certainly, will be remodeling the house instead of moving to the new one.
- When chosen to remodel or renovate, it is necessary to write down the goal of doing it. How long you plan to stay in the remodeled house? If the house you are living in presently, is just for a short period duration and your conditions make moving to new place evident, then remodelling will be a waste of time and money. You can get some make-shift arrangements done to create more space off the existing area of the house.
- Need to expand the area or just want another room? Once you have planned remodeling, you can also give a thought to how to get the task done in the least expensive way. Find out how creating more room will help viz-a-viz adding more rooms to the house. Are there any approvals required? Will there not be any changes in thoughts pertaining to material used, in terms of flooring tiles, walls, furniture etc.?
All such things pointing to lot many certainties may compel you thinking about moving to the bigger house, especially if the current one is something you don’t value so much emotionally.
- Moving to the bigger house instead of remodeling is the decision fit for you when you have found something suitable exactly for your current as well as long term plans. You may have found another location that is fit for your occupation, suitable for growing kids and also is promising in terms of locality and returns, likely to be generated off it over the years. In such case, selling the old house first will be the best call.
Home planning situation 3 – No remodeling, just moving to a bigger house – how to manage?
So, when you have finalized the idea of moving to the bigger house after selling the old one, here is how you can manage things better.
- Give yourself ample time finding the best rates, best locations and best homes for sale by doing ample and in-depth market research.
- Use the property transaction time in searching for the new temporary accommodation if the possession of the new property you have liked is not happening in due dates, in near future.
- Use a portion of returns generated off the old house as means to lower down the EMI if you plan to finance the new house purchase.
- Save at least total of 1% of the investment amount meant for buying new house as emergency fund, as with a growing family, needs grow too.
- Also, you would require funds to get the house furnished, in terms of furniture, electronics and other solutions to be installed in the new property if it is totally unfurnished. So, make provisions for these too.
To conclude, confusions are quite likely to occur when you need to plan on various points simultaneously. So, mentioned above are the situations that are of common occurrence in anybody’s life where the next move is expanding the family. Find out what would work best for you and take the right decision accordingly.
Homes can be quite confusing, choosing a right home takes in a lot of time, efforts and patience. Well, HousingMan is here, to help you with all the stress which comes along with home planning, by easing out the entire home-buying process, keeping your needs, goals and aspirations in mind.