If you are buying a property along with selling a property, you’ll need to think about sequencing these transactions.
Some people are able to time the sale of the two properties to both close on the same day. That way the proceeds from the sale of your current property can be directly rolled into the purchase of your new property.
In today’s real estate market, such perfect timing is not always possible. If the sale of your currrent property closes first, you will simply recieve cash from the sale, which you’ll need to hold onto until the purchase transaction closes. If you are planning to transfer your current mortgage to the next property, financial institutions are typically open to allowing up to 3-months before you complete your purchase, but be sure to check the rules on your specific situation.
If the purchase transaction closes before your sale transaction, you are going to need to borrow additional funds for the time between the two closing dates. Your mortgage broker or lender, can set this temporary financing up for you. It is an interest only loan. What this means is that all you’ll be paying is the daily interest cost, you are not trying to pay down the principal the way you would in a regular mortgage.
If you are looking for a more detailed examination of your situation, please let Ralph know.