So, you have found your dream home but you’re not sure whether you should sell your existing house to buy the new home or keep your existing house, lease it out and buy the new home.
There’s no right or wrong answer to this question but there are a number of considerations to keep in mind.
The first thing you need to ask yourself is how would you feel if there were other people living in your old house? If you sell it, can you cut yourself off emotionally from the old house? If you keep it and rent it, it’s still yours but you might feel that the tenants may not look after it like you did.
If you can get over the emotional aspect of somebody else living in your home, there are some financial considerations.
Here’s an example:
Imagine your existing home is worth $400,000 and you have a Rs100,000 mortgage on this house. The new home you want to buy is worth Rs600,000. Let’s assume that you only have enough cash to pay for the buying fees such as stamp duty and to keep it simple, there are no other fees or costs. Also, if you rent your existing home, you should receive Rs20,000 per year.