How To Break The Housing Chain

A housing chain can affect the rental market just as it can affect the buying market. The chain is always there, unless you are a first time buyer of a brand new property, you need to understand the chain.

When you are caught up in a property chain, it can be really frustrating. A chain can often mean that properties are lost, or processes delayed when all everyone wants to do is to move house. You can’t acquire a new property without first selling the one you’re in because you need the money for a deposit on the one you want to get, however the person purchasing your property may be in the same situation. This implies that a house-buying chain may be quite extensive, and one failed transfer can derail it completely.

This chain also affects the rental market, with tenants having to leave, properties needing cleaning and then new tenants moving in, all within their contracts in their current houses, and possibly the end of the chain looking to get out of the rental market and to purchase a property with another chain to contend with.

In addition to adding stress and financial burden, being caught in a real estate transactional chain might prevent you from closing on the house of your dreams. Thankfully, there are steps you may do to break the housing cycle.

The housing chain may be broken in three ways:

1. Sell first, then purchase. The benefit of trading your house and moving into rental housing is that you will be in a much improved situation to act swiftly when your next property becomes available.

2. Don’t sell, but increase your current mortgage to use as a down on a new house. The approach to break a chain is to prolong the loan on your present home and use the funds as a reserve on the new place.

3. Obtain a bridge loan. Bridging loans are often risky and expensive. Yet, if you have located your ideal house or need to pay a deposit for the financing, it may be useful arranging a short-term loan secured upon your property and paying it back once you sell. Bridge loans might provide you with the short-term money you need immediately.

You should keep in mind that if you have resources in your favour, you may actively look for properties to invest in that do not constitute a link in a chain. This is something to keep in mind if you are interested in real estate.

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