Everybody dreams to have a bigger and better house. And why not? If you can afford it, you should do it. However, if a decision involves a substantial amount of money it’s important to make sure you understand fully what you’re getting yourself into. There can be a number of reasons for upsizing, for example, you might want to upsize if you are:
- Planning to tie the knot with your partner
- Having children
- Creating a small business setup in your house
- Having a friend or family member move in with you
No matter what the reason is, if you are planning on upsizing, keep the following in consideration.
How Much Can You Borrow?
It’s very important to know how much you can afford to borrow. When deciding, a number of factors come into play, including:
- Terms of the loan
- Number of dependents in your family
- Your expenses on a monthly basis
- Your annual income
Online mortgage calculators can serve as useful tools to figure this out, but if you want to be certain, talk Hunter Galloway about your personal finances. Upsizing will allow you the opportunity to review your financial situation. In addition to that, ensure your banking structure is in line with your financial goals and if you need to consolidate or refinance your debt, do so.
What are Your Long-term Goals?
When organising your upsize, keep your long-term goals for a property in mind.
For example, the purpose of buying a bigger house can be for personal reasons or if you are buying a house for investment purposes, it could be to make money. There are some people who want to make lifestyle changes when they upsize their homes, but others only do it to make a profit.
If you are aware of your goals in the beginning, it will provide a better chance to choose the right property that will meet your current, as well as future, requirements.
Have you Included Renovation and Maintenance Costs in Your Plan?
Buying a bigger property is not a one-off cost. It involves additional ongoing costs, such as:
- Home insurance
- Property taxes
Therefore, when you plan to upsize your property, keep these factors in mind. You may also need to consider renovating to transform the property into what you had imagined. Another option includes staying in your existing house and renovating it instead of buying a new home. However, you must avoid over-capitalising. Ensure you don’t spend so much on a renovation that it exceeds the profits you can earn by selling a house at a better price due to such improvements.
What are the Other Costs Involved in Upsizing?
There are a number of other costs involved in upsizing. To avoid unwanted surprises at the time of settlement, you must include other costs in the upsizing plan. Below are some of the costs you must consider when deciding to upsize your house:
- Stamp Duty – People normally forget about this cost even though it raises the price of a property. Stamp duty is payable at the date of settlement or before that.
- Lender’s Mortgage Insurance – If the amount of a loan exceeds 80 percent of the property price, you must include this cost into your plan as well.
- Moving Costs – This cost includes new fixtures and fittings for a new place and also include the cost to transfer utilities.
Can You Manage the Time Delay between Purchasing a New Property and Selling the Old One?
Often buyers find a house of their dreams, but find that their existing house is still not sold. In this case, you can speak to your mortgage broker as they can help you choose from a variety of options, such as bridging loans. Banks can lend you the money to cover the period between two transactions, i.e., selling the old house and purchasing the new one.
There are a number of factors that come into play when upsizing, so always seek advice from a Hunter Galloway to guide you in the right direction by reviewing your budget and keeping in mind your financial goals.
Chat to our team now on 1300 088 065 or email Nathan at Nathan.Vecchio@HunterGalloway.com.au now.