Moving up or moving on

No matter how much you love your home, there may come a time when it no longer suits your needs. You may need more space for a growing family, or you might want to move to a new location that’s closer to work or offers a different lifestyle.  

Whether you’re upgrading or relocating, if you still have a mortgage on your current property then you’ll need to make some decisions about the best way to transition to your new property. Your Mortgage Choice broker can guide you through this process and help you consider your options. 

Here are some of the things you’ll need to think about. 

Should you buy before you sell, or sell before you buy? 

By selling your current property before buying a new one, you’ll know exactly how much you can spend on the next property. That means you won’t feel pressured to sell your home for a lower price than it’s worth for the sake of a quick sale. The downside is that you may need to find temporary accommodation in the period between selling your current home and finding a new one.  

If you do buy before you sell, you can discuss the option of a bridging loan with your broker, or you might want to speak with your agent about negotiating an extended settlement. If the buyer agrees, you’ll have a little more breathing room when it comes to buying your next home. In some cases, it may even be possible to rent your property back from the buyer of your home for a set period. 

Have you considered renovating instead? 

If you love your current home and neighbourhood but you’re feeling cramped for space, it may be worth exploring the costs of renovating instead of moving. Could you change the configuration of your home? Is it possible to extend up or out? If you’ve built up equity in your property that you can access by refinancing, you may have a healthy budget to create your dream home. 

Staying in your current home means avoiding thousands of dollars in costs like stamp duty, real estate agent fees and legal costs. However, renovating comes with its own costs. As well as the cost of trades and materials, you need to factor in the costs of getting plans drawn up, seeking council approval and potentially finding temporary accommodation if the renovations will be too messy and disruptive for your family.  

Be careful not to overcapitalise. This occurs when you spend too much money on improving property and you’re not able to recoup your expenses when you decide to sell it. The best way to check if you’re overcapitalising is to research the average selling price for comparably sized homes in your area. Check the ‘Sold’ category on realestate.com.au or ask your Mortgage Choice broker to provide a summary of recently sold homes in your neighbourhood.  

Can you afford to keep your property as an investment? 

Depending on your financial situation, you may be able to consider turning your current home into an investment property and using your available equity to fund your next home purchase. This can be a little complex, so it’s a good idea to get professional home loan advice. Your Mortgage Choice broker can provide advice about how to structure the loans and help you work out if your home would make a good investment property. 

These questions will get you started: 

• Will it be easy to find and keep tenants for the property? 

• Will the rental income cover the mortgage and other costs, such as maintenance and landlord insurance? 

• Is the property close to features attractive to potential tenants, such as public transport, shops, cafes and other amenities? 

• Will the property need frequent repairs or ongoing maintenance? 

• Do you have a cashflow buffer to cover periods of time when the property isn’t rented?  

• Is the property likely to grow in value over time so it can generate wealth for you? 

Not every property makes a good investment. If your home isn’t suitable for renting, you may be better off selling the property and buying something else further down the track if you’re keen to invest in property. 

Do you want to stay with your current lender? 

Moving to a new property is an opportunity to review your home loan and consider if it might be time to refinance.  As well as securing a home loan with a more competitive interest rate, refinancing could also enable you to access a loan with features that better suit you. Alternatively, if you’re happy with your current loan and lender, you may be able to use a feature called ‘loan portability’, which allows you to move your existing home loan from your old property to your new one.  

Your Mortgage Choice broker can look into refinancing options so you can decide what’s best for you. With access to hundreds of loans from our panel of more than 35 lenders, we can find the loan best suited to you and negotiate a competitive rate. 

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