The second time around, buying a home is a lot easier because you’ve been there before. Still, if you are selling your current home, there are few extra things to take care of.
Why are you buying your next home?
There are many reasons you may want to buy your next home. You may have outgrown your current home. Or you may want to downsize and move to an area that better suits your lifestyle. You may also want to move nearer to better schools for your kids, or closer to your job, your family and friends.
If you are happy with your location and the neighbourhood you’re in then you could look for homes in the same area. Or you may consider renovating or extending your current home rather than moving.
Using the equity in your current home.
Equity is the difference between the current value of your home and what you still owe on it. So if your home is worth $600,000 and you owe $200,000, then you have built up $400,000. You build up equity by paying extra payments into your loan and by the natural increase in value of your home.
You can use the equity to help pay the deposit for the new home. There are a number of ways to access that equity.
- Refinance your existing loan
- Using you redraw facility (if available)
- Getting a Bridging Loan
Our lending specialists can assist you to find the right lending solution to achieve your goals.
Call us on 03 8560 5000 and book an appointment and we can come to your home or office.
What are the costs?
If it has been some time since you bought your previous home, you may not have considered all the additional costs. Keep in mind that there are selling costs like real estate agent commissions, marketing fees, and moving costs. Then you will have other fees like stamp duty, legal fees, mortgage registration fees and transfer fees.
You have to also be aware if there are any break costs to your current mortgage. This is especially true if you have a fixed rate mortgage as these costs can be quite substantial.
All of these costs can be significant and you need to keep abreast of them throughout the whole buying process.
Work out your budget
You can achieve your financial goals and lifestyle needs by buying your next home. However, it is important to work out what you can afford and to be realistic. It’s all very well to upgrade to a nicer home, but if you have to live on bread and water to do it, then it’s not realistic.
By calculating the net equity available in your current home, after taking away all the costs of selling and buying, and using our mortgage calculator, you can work out what your repayments are likely to be. You may want to allow a buffer for interest rate fluctuations just to be safe.