How to avoid paying a double mortgage when buying a new home

Purchasing a new home while still owning your current property can be financially challenging, especially if you manage two mortgages simultaneously.

To avoid paying a double mortgage, consider the following strategies:

Use a bridging loan

A bridging loan is a short-term loan that can help cover the gap between buying a new home and selling your current home. This type of loan can prevent the need for paying two mortgages simultaneously.

Key benefits:

• It provides financial flexibility to purchase a new home before selling the old one.
• It can be structured to cover interest payments, easing cash flow concerns.
• Typically, it has a term of 1 to 24 months, allowing ample time to sell your current home.

Practical steps:

• Consult with a mortgage broker to understand the terms and conditions of bridging loans.
• Apply online with Funding.
• Ensure you have a realistic plan for selling your current home within the loan term.
• Compare different lenders to find the best bridging loan rates and terms.

Rent out your current home

If immediately selling your current home is not feasible, consider renting it out. The rental income can help cover your mortgage payments while transitioning to your new home.

Key benefits:

• Generates income to offset mortgage payments on your current home.
• It provides more time to sell your home without financial pressure.
• It allows you to benefit from property value appreciation over time.

Practical steps:

• Research the rental market in your area to determine a competitive rental rate.
• Hire a property management company if you prefer a hands-off approach.
• Ensure your property is in good condition to attract reliable tenants.

Negotiate a longer settlement period

Negotiating a longer settlement period when purchasing your new home can provide additional time to sell your current home, reducing the overlap between mortgage payments.

Key benefits:

• It provides more time to sell your current home without rushing.
• Reduces the likelihood of having to manage two mortgages simultaneously.
• Allows for a smooth transition between properties.

Practical steps:

• Discuss your needs with your real estate agent and convey them to the seller.
• Be prepared to offer incentives to the seller, such as a higher purchase price or flexible terms.
• Use the extended period to market and sell your current home actively.

Explore home swap options

In some cases, you may find a home swap arrangement where you and another homeowner trade properties, which may eliminate the need to manage two mortgages.

Key benefits:

• Simplifies the buying and selling process by consolidating transactions.
• Eliminates the financial burden of paying two mortgages.
• Provides a direct and faster solution for moving into a new home.

Practical steps:

• Look for home swap programs or platforms that facilitate these arrangements.
• Work with a real estate agent with home swap experience
• Ensure all legal and financial aspects are thoroughly addressed in the swap agreement.

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