At some point all of us reach a point where our current property no longer meets our specific needs. Each new stage in our lives demands different things of us and our home environment must adapt to accommodate these changes.
It may be that you need more space for a home office, or that you’d like a backyard and a shed to indulge your passion for gardening and home DIY projects. Or maybe it’s the most common reason of all for upsizing – there are about to be more people in your house! Do you and your partner own your own separate apartments and now want to buy a house and move in together? Or is it that there’s a baby on the way, or you’re adding to your existing brood?
Whatever the reason, the same considerations apply when selling your existing home and buying something bigger. Make sure you understand your financial options and obligations and are prepared for the added commitment and responsibility that comes with owning a bigger property.
To help you get started we’ve put together some Q&As that cover the basics.
How do I know if I can afford to upsize?
Even if you don’t have a lot in savings, you can still leverage the purchase of the new home from the equity in your existing property. Buying bigger will inevitably increase your financial outgoings so make sure you have a good sense of your existing budget and how it will change. Also factor in your savings and the realistic estimate of the sale price of your existing home, to be sure that this is a good financial decision as well as a necessary personal decision. Make sure you include the additional expenses of upsizing such as stamp duty, professional solicitors and agents fees, reports, building and pest inspections, removalists, and of course new furniture for those extra rooms!
Should I sell before I buy the second house or wait?
If you are upsizing because your financial situation has improved, then you may be in a good position to manage two mortgages at once (if you buy your second home before the first is sold). However, a more cautious approach would be to sell your existing property first, then move into the buying process, knowing exactly what your financial commitment to the next property can be. You can always store furniture and stay with friends or family, or even take a short term rental while you look for just the right property for your needs.
Do I have the time to maintain a bigger property?
A bigger property inevitably requires more work to maintain so put careful thought into this when making a purchasing decision. An unkempt garden, a dirty swimming pool or a leaking roof can all affect the value of your property over time, as well as develop into a bigger expense in the long term if you don’t have time in the short term to take care of these issues regularly.
Does this decision align with my long term investment goals?
Upsizing may be a necessary and practical decision for your lifestyle change, but is a good decision from an investment perspective? If you impulse-buy something because it’s beautiful, but can’t really afford it, you may find yourself quickly descending into mortgage stress. Make sure the property is not just a practical solution to your current space issues but is also going to be a good investment in the long run.
Life changes are exciting and the chance to grow into a bigger property is something many of us dream about. If the time has come for you to upsize your home, just make sure you have considered it from all angles. Shop around for a good home loan that takes into consideration your investment plans. Now might also be the time to find yourself a financial planner you can trust to help you move forward.