Your Guide To Upsizing Your Home
In Australia, there is a known market trend of upgrading homes as families grow in size. In cases like these, upsizing is often a necessary move.
If you are thinking of upsizing, there are benefits and downsides that you need to consider. The first thing to remember is that upgrading into a larger home can come at a significant cost. Apart from that, there are a bunch of things to go over before making the big move.
What Is Upsizing?
Wanting to upsize and needing to upsize are two different things. If a little maintenance and renovation can solve the issues you have with your current home, upsizing is not the answer. But if your family is growing and you are ready to upgrade your lifestyle with a bigger mortgage, that’s when the need for upsizing arises.
Calculate your needs and make sure you consider a few things before you research further.
Where to start
- Double Check With Your Lender: When you upsize, it is likely that a lot of equity from your home will be used to make the move. Your down payment, along with your purchase price, will go up. This means you might be able to get a bigger mortgage from your lender than you currently have.
- Decide If You Can Handle A Bigger Home: Ask yourself this question: Do I have enough time, money and resources to maintain this bigger home? If you are already having trouble maintaining your current home, you might want to think about what you don’t like doing and get a house that eliminates that issue.
- Do You Buy Or Sell First?: Once people decide it is time for them to upsize, they often are undecided about whether to buy first or sell first. Experts say the better way to go is to sell your old home before you buy a new one. This is to make sure you have funds ready from your sale for when you decide to proceed. You will also be able to put more money on your mortgage, and can avoid going back and forth between two mortgages at the same time.
5 Questions To Ask Yourself Before Upsizing
1. What Is My Reason For Upsizing My House?
Do I need more space for a growing family? Am I looking to upgrade my lifestyle? Answers to these questions will not only tell you whether you should upsize your home right away, but will also give you a picture of what you want in your new home.
We suggest creating a list of what you want and don’t want to guide yourself and your agent during your search.
2. How Much Can I Borrow?
Knowing your possible mortgage costs in advance helps you be more clear on what kind of property you want. Talk to your lender and figure out how much you can borrow for a home upgrade.
3. Can I Cover The Costs Of Upsizing?
What are the costs associated with upsizing? Answer: perhaps much more than you are taking into account now.
These costs potentially involve a large stamp duty bill and Lenders Mortgage Insurance if you’re considering borrowing more than 80% of the property value. Costs of moving your things into your new home are also involved.
4. Am I Able To Afford The Greater Ongoing Expenses?
Keep in consideration that upsizing always comes with a surge in expenses, compared with your previous home. Moving into a bigger place means higher utility bills, higher repairs and maintenance costs, and the need for more homeowners’ insurance to top it all.
Before talking to a professional about upsizing, calculate these expenses and see if you are financially capable of making payments.
5. What Are My Long-term Plans For My New Home?
Moving to a larger house is a big commitment. This decision should be based strictly on where you want yourself and your family to be in the longer term. For example, if you are planning this to be your last stop before retirement, make sure all your ‘must haves’ are ticked off.
Selling a bigger house may be harder since not everyone is looking to buy a larger place. Keeping this in mind, decide on your long-term plans with your newer place before bidding on it.
With many things to consider when thinking about upsizing your home, it is a must that you base this decision on plenty of research. Upsizing requires a balanced co-ordination between selling your old home and buying a new one. This process can be daunting and needs to be timed correctly to keep costs manageable.
Heaps of genuine and not-so-genuine material on the internet can make things even more confusing. It’s always a good idea to contact a professional to help you review your financial situation before making a decision.
Our experts can help you get a clearer picture of what your mortgage situation requires. Call us on 1300 889 743 to speak to one of our Experts or fill out this free online assessment form to have us contact you.