Have you ever wondered “Can I trade my house for another house?” The answer is yes, you can. Like any other stuff, even expensive ones like exchanging a car or a motorbike. And nowadays, finding a suitable house option for you to trade is easier than before.
But, it is not always mandatory to find another house in exchange to trade yours for it. How does it work? Let’s dive into the details about how you will trade your house or exchange it with another one that suits your needs and preference.
How Trading Your House Works?
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The easiest way you can trade your house is if you know someone else who is interested in your house and you are interested in theirs. This is a pretty rare case to match up this much perfectly, but if you find deals like this, it is the easiest method you will be able to trade your house.
Even if you don’t know someone who is willing to sell or exchange a house of your preference, you can look online for people who are. There are several platforms that are dedicated to connecting two people who are willing to trade or exchange their house. When you finally land on a connection where you like their house and they like yours, you both can consult your lawyer and then arrange for the exchange.
You can still trade your house for a new one You just need to look for suitable homes that would be an upgrade for you. When you choose a suitable home for your family, you can purchase the house and then sell your old one. The key problem with this method is money, and also the timing. Taking a traditional home loan can solve this problem. However, you need to be cautious about your accounts and the benefit you are getting from upgrading. You also need to acknowledge that your old house can take time to sell, and you will need to carry the loan till it gets sold.
If your house and the location have value and good potentiality, builder companies will buy your house and give you a new one. In most cases, they look after their profit first, and you will have to add some money to the deal in order to get an upgraded house. There are lots of terms and conditions with this type of deal, but this is a suitable way to trade your house for a new one.
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If you are willing to trade your house for another one, you need to follow some steps for a complete, hassle-free house exchange.
Step 1 – Find a house
The first thing you need to do is find a suitable house you will trade yours with. You need to be keen on the following – the location, the size, build quality and materials, and the price point.
While finding a suitable house, Check the house and all its features, how many things require repairing and replacing, and also the documents and the legal history. To check the legal documents and history, take professional help from lawyers.
Step 2 – Discuss the conditions
Look and judge thoroughly the condition and the looks of both houses. Then, calculate the current value of both houses.
Fix the price points and negotiate this before proceeding with legal steps for exchanging the houses. Also, discuss and determine all the terms and conditions, and note down the problems of both your house and the other house.
Step 3 – Get a Mortgage
Contact the bank or lenders for taking a mortgage on your home. When you qualify for a loan, you will need to take a mortgage, with clear mentions of closing in the contract. You will need to mention clearly that Selling the old house and buying the new one are two different transactions. Similarly, the other house owner needs to make a mortgage on his house to buy your house.
Step 4 – The Exchange
Both you and the other party need to agree on the same closing day of the mortgages, which will also be the day of exchange. They need to decide the date in advance and proceed according to that. It is notable that when you are trading the house, this closing date is very important.
Step 5 – Outstanding Mortgage
If the other house has any outstanding mortgage, calculate it thoroughly, and then adjust it with the price you are buying the house for. Check thoroughly for any outstanding mortgage, and make sure it is cleared on the closing day.
Step 6 – Closing The Deal
Both parties need to be together on the closing day of the deal, and their lawyers or realtors will also handle the process and the transaction.
The sell contracts need to contain every detail. When the exchange happens, the mortgage taken on the houses solely for this trade can be cleared by the new owners, with the money he or she got from selling his house.
When you buy the house of the other person, you are paying him with the money which came from the mortgage of your house. Similarly, The other person is buying your house, is paying you with the money he got from the mortgage on his house.
When the transfer happens, that person can pay off the mortgage of his old house with the money he or she got from you for selling his house. Same way, you can pay off the mortgage on your old house, with the money you got from him for selling your house.
Both parties need to trade their houses, close the deal, make transactions of any money that is promised due to uneven value, and close the mortgage. If you don’t close the mortgage on the closing date, you might end up with two mortgages on you!
Another Way of Buying and Selling A Home At The Same Time
Another method you can resort to for trading your house is exchanging with builder companies, as we have mentioned before. In this method, you will buy and sell your house at relatively the same time.
When you contact any builder company and ask them “Can I trade my house for another house?”, they will respond with attractive housing options for you. Also, they will start to validate the value and potential of your house.
You will face a lot of terms and conditions, so it is a good idea to get a lawyer to translate the deal for you. A company can simply buy the house from you, give you money, and you can use that money to get a better house from their offerings.
But, you will need to make a contract, and a proper deal before you deal with a builder company about exchanging your house.
You can also resort to the mortgage method, as it is safe and ensures safety and security.
What are the requirements for a second mortgage?
When there is an outstanding mortgage, the bank or any lender will not give a second mortgage. But if you have a contract document with the other house owner which states you will sell the house to him or her on any specific date, the bank or lender will examine the legality of the contract and if valid, grant you the second mortgage.
Then, you can use that money to buy the other house on the closing day, and the money you get from the other homeowner from selling your house can pay up both the mortgages, the outstanding one and the second one.
Make sure to mention and specify in the second mortgage contract that selling the house and buying the new one are two different transactions, so no further legal confusion is created.
Read: How to Sell a House by Owner Paperwork – Get the Most Logical Explanation.
Final Words
Can I trade my house for another house? The answer is always yes, but the real question is if you really need to move to another house.
But, if you are really in need of a new house, currently exchanging for another suitable one will give you better value and less hassle than selling and buying one. Follow the trading steps accordingly, and make sure you always have legal support from your lawyer.