How to buy a new property relying on proceeds from sale of current property?

Hi PC’ers, I have a hypothetical that require your input please.


We are selling our property, exchange in February 2016 and settlement in April 2016.


We would like to buy a new property (partially funded by the proceeds from the sale of our current property). The new property is expected to settle in April 2016, 2 weeks after the sale/settlement of our current property. The anticipated LVR on the new property will be around 60pc.


Assuming serviceability is ok, would a bank give us a loan to buy the new property (ie: 60% of the purchase price of the new property on settlement date for the new property) after we have exchanged on our current property? Or would the bank need to see actual full proceeds in our bank account from the sale of our current property before agreeing to lend us the balance on the new property?


Thank you in advance!

 

Most will just want to see the COS for the sale, they will assume the debt is clear in their serviceability and application assessment. They will have it as a settlement condition that your sale goes through concurrently or before.

If you need funds for the deposit, either set up an equity pull prior or use short term instruments (deposit bonds) to cover that portion.

 

Thank you Redom! Very helpful. Cheers

 

Are both loans with the same lender? If the first property doesn't sell as expected (buyer fails on finance for example), maybe worth looking at a bridge loan?

 

Where possible I would want to have finance arranged that if the sale fell through that you could still purchase.
Also ideally want to keep it out of a full 'bridging' scenario - usually by looking at worst case the existing could become an IP if needed.